Israel’s economy grew slightly faster than expected in the third quarter as Intel Corp worked to complete a $6bn plant.
Gross domestic product expanded at an annualised rate of 3.2%, compared with a revised 4.9% in the previous three months, the Central Bureau of Statistics said on Wednesday. Exports of goods and services fell 4.7%, while imports rose 5.8%. The median estimate in a Bloomberg survey had been for 3% growth.
The stronger growth supports the case for an increase in the benchmark interest rate, which has been held at a record low 0.1% since March 2015. Annual inflation has been negative for 26 straight months but the Bank of Israel expects prices to pick up as the effects of falling energy prices and government measures wear off.
Higher wages driven by full employment have been fuelling consumption. Investment in fixed assets, a key barometer of business optimism, rose 12.2% in the third quarter.
“The large increase in imports and investment is largely the story of Intel building its huge plant here,” said Rafael Gozlan, chief economist at Israel Brokerage & Investments Ltd in Tel Aviv. The new production line is scheduled to open this month.
Strong local demand has made up for weaker exports as global trade remains sluggish and a strong currency makes the country’s products expensive abroad. Increased competition and consumer demand have fuelled imports in the last six quarters, while exports have declined in two of the last six quarters.