The Israeli economy shrunk in the third quarter after a five-year expansion spree after violence in the Gaza Strip affected production and turned away tourists.
The gross domestic product plunged 0.4 percent, down from a 2.2 percent growth in the second quarter, reported the Jerusalem-based Central Bureau of Statistics on Sunday. Economists surveyed by Bloomberg News had expected zero growth.
“Tourists didn’t come,” Ori Greenfeld, a Tel Aviv-based chief economist at Psagot Investment House Ltd., told Bloomberg. “Some factories didn’t work and others didn’t work at full capacity. People went out less.”
At least 4,500 rockets rained into Israel from Gaza in the conflict that rage between July and August, shaving off 0.6 percentage point off the economic growth, which is forecasted to reach 2.4 percent in 2014.
Israel’s economy grew 3.2 percent last year. The Middle Eastern nation’s economy has grown faster compared to its developed nation peers after the financial recession, before slowing down last quarter. This prompted the Bank of Israel to lower its target rate recently in July and August, and purchased foreign currency in order to devalue the shekel and hence boost exports.
The shekel fell at least 10 percent versus the dollar since the start of August and traded at 3.8123 as of Nov. 14. Most analysts don’t expect the Bank of Israel to lower the interest rate again at the end of this month.
Meanwhile, China’s bad loans in the third quarter surged the most since 2005, leading to speculation that banks may reduce lending in order to curb risk of losses.
Nonperforming loans surged 72.5 billion yuan ($11.8 billion) from the April-June quarter to 766.9 billion yuan, reported the China Banking Regulatory Commission on Saturday. Bad loans stood at 1.16 percent of the total lending, compared with 1.08 percent in the second quarter. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org