Israel's economy is expected to grow 7.1% in 2021 and 4.7% in 2022, the Finance Ministry said on Monday in updated forecasts following a rapid recovery from the COVID-19 crisis, Trend reports with reference to Reuters.
The ministry had previously projected 5.1% growth this year. Its forecasts are largely in line with the Bank of Israel's forecast of 7% this year and 5.5% in 2022.
After the economy shrank in 2020 and early in 2021, Israel in March emerged from its third coronavirus lockdown amid a rapid vaccination rollout. The economy grew 16.6% in the second quarter at an annual rate from the prior three months.
Preliminary gross domestic product data from the third quarter are due on Tuesday, with GDP expected to grow an annualised 6% according to a Reuters poll of economists.
In 2019, Israel's economy grew 3.8%.
In its updated forecasts, the ministry's economists said they took into account the latest wave of COVID-19 infections that did bring the strict restrictions in activities that the government implemented in previous waves.
Private spending, Israel's main economic growth driver, is expected to grow 13.1% this year and 7.5% next year after a drop in 2020 while exports are recovering due to resiliency in the country's high tech sector.
The ministry forecasts an inflation rate of 2.8% in 2021 and 2.1% in 2022 - within the government's annual 1-3% target. The central bank has said it saw some inflation pressures as transitory, while Israel's strong shekel was helping keep imported prices under control.
At the same time, tax revenues have surged 25% in 2021 and are expected to be 16.5 billion shekels ($5.3 billion) and 14 billion shekels higher than forecasted for 2021 and 2022, respectively.
Israeli lawmakers earlier this month approved the 2021 and 2022 state budgets, the first time a budget had been ratified in more than 3 1/2 years.
Some 43% of Israel's population have already received a third COVID booster shot, while 62% have two shots. Vaccines are now being prepared for children aged 5 to 11.