2001 was the blackest year in the Israeli economy since the austerity year [known as the year of tzena, when there was rationing] of ’53, according to data published by the Central Bureau of Statistics. The most conspicuous sign of the deep crisis is the negative growth of 0.5% in the Israeli economy this past year.

The gloomy statistics on the extent of recession were even gloomier than previous estimates published by various experts and economists. Last year there was a negative growth in the economy: Local output declined by 0.5%, and per capita output declined by 2.9%. For comparison purposes, in the year 2000, local output had jumped by 6.4% and per capita output by 3.6%. Business output declined by 2.1%, after rising by 8.5% in 2000, according to new estimates by the CBS. During the last few months of the year, the recession deepened. In the second half of 2001, negative growth reached a disturbing rate of 5.3%. Business output declined by 6.3% as a result of the crisis in hi-tech. Per capita output declined by 7.4%. Total investments declined by 19.5%.

Last year’s growth was the lowest since ’53, when output declined by 1.4% and per capita output by 4.1%. Moreover, since ’53, there has not been an annual growth of less than 1%.

Private consumption has also entered a recession: The living standard (per capita consumption) grew by only 0.6% in contrast to 3.6% in 2000. Acquisition of cars declined by 8.1% and electrical appliances declined by 7.4%. Consumption of food and drink declined by 0.3%.

Domestic output in 2001 reached NIS 463.9 billion (USD 110.2 billion). Per capita output declined to NIS 72,000 (USD 17.1 thousand).

Another disturbing datum: Growth in Israel was the worst in the world (except for Japan).

And in contrast to pervious years, the start-up companies actually contributed to the deep recession in the economy: Without these companies, the output rose by 0.4%, in contrast to 4.4% in 2000.

Total exports declined last year by 13.1% after rising in 2000 by 24% and 12% in ’99. The steepest decline was in the output of the hi-tech branches (including the start-up) companies and in the output of the construction industry. Industrial output declined by 4.6% in 2001 (as a result of the hi-tech crisis) after jumping by 10.8% in 2000. Construction output declined by 10.5%, continuing the decline over the last few years.

Investment in the construction of residential apartments declined by 15.8% to 7.2% in 2000. This means a steep decline of 17.5% in private construction and 4% in public construction.

It should be pointed out that the 2001 data are even worse than initial estimates published in October. But the really worst news is that the experts anticipate that 2002 will also be a year of recession and economic standstill: Growth will be lower than 1% and business output will be negative. A freeze in exports, investments and the living standard of the Israeli public is also anticipated.

This article ran in Maariv on Dec, 31, 2001

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