Israel's Economy Shows Mixed Signals with Q3 Growth and CPI Trends

Israel's economy experienced a mixed performance in the third quarter of 2024, as reported by the Central Bureau of Statistics (CBS). The country's Gross Domestic Product (GDP) grew by an annualized rate of 3.8% in Q3, showing positive quarterly growth of 0.9% compared to Q2 2024. However, when compared to Q3 2023, the GDP saw a slight decline of 1%.

In the business sector, the GDP rose by 4.7% annually and 1.2% on a quarterly basis, driven largely by an 8.4% annual increase in private consumption, alongside a 2% quarterly growth. However, the business sector GDP experienced a 3% annual drop compared to the same period in 2023, reflecting a mixed trend in business activity.

Price Trends Show Decrease in Consumer Costs

On the consumer side, Israel saw a decrease in its Consumer Price Index (CPI) for November 2024, dropping by 0.4% compared to October 2024. Significant price decreases were observed in various sectors, including fresh fruits and vegetables, which dropped by 6.6%, and transportation costs, which declined by 1.5%. Education, culture, and entertainment also saw a decline of 1.3%, while footwear prices fell by 0.7%.

However, some sectors experienced price increases. Clothing prices rose by 1.2%, and housing and miscellaneous costs went up by 0.3% each. Notably, the prices of private vehicles and their maintenance increased by 0.4%, while foreign travel and flights saw a 6.8% drop. Hotel and guesthouse prices dropped by 7.6%, reflecting a shift in the tourism market.

Meanwhile, Israel’s air travel industry is gradually recovering, with several international airlines resuming flights to Ben Gurion Airport. Romanian low-cost airline Biz Airlines, Spanish carrier Air Europe, and Hungarian Wizz Air are among the airlines returning to Israel in the coming days. Polish airline Lot and Air Baltic are also expected to resume flights later this week. However, Air France has extended its suspension of flights to Israel until January 9, following a security incident involving a missile fired towards Ben Gurion Airport.

Economic Outlook and Consumer Behavior

Despite fluctuations in the economy, Israel's consumer behavior indicates strong private consumption, especially in retail and travel sectors. The decreasing CPI, combined with the rising costs in certain sectors, suggests an economy facing both opportunities and challenges.