Israel's Economy Grows 0.4% in August Driven by Imports and Taxes

Israel's economic activity expanded by 0.4% in August, according to the Bank of Israel's monthly index, indicating continued economic growth slightly above the long-term trend of approximately 0.3%. This index estimates monthly GDP growth based on current data, providing an early assessment before official national accounts are released.

The August increase was primarily fueled by a rise in consumer and production imports, along with higher VAT and indirect tax revenues. Actual GDP figures for the second quarter also contributed positively to the index.

However, other indicators suggested a more moderate economic picture. Credit card purchases, goods exports (particularly industrial exports), retail trade figures, and employed job numbers tempered the overall growth rate. A decline in the Nasdaq 100 index in July and August's job vacancy data also had a negative impact.

The Bank of Israel emphasizes that the index measures a three-month average, making it less sensitive to single-month fluctuations. The August data shows continued economic expansion but highlights a divergence between different components, with imports, tax collection, and GDP supporting growth, while consumption, exports, and some labor market data indicate a more subdued trend.

Additionally, the Bank of Israel slightly revised its previous estimates, lowering the July figure and raising the June figure based on updated data. The overall August performance points to ongoing economic activity, but with varying contributions from different sectors.