Surprising no one, the Israeli economy contracted in the 4th quarter by 0.5%. Coupled with slower economic activity so far in Q1 ‘09, it appears that the local economy will officially be in a recession.

According to Globes: “In the second half of 2008, private consumption fell at an annualized rate of 1.1%, after rising at a rate of 4.8% in the first half. Private consumption per capita (standard of living) fell at an annualized rate of 2.9%, after rising at a rate of 3.0% in the first half. Per capita spending on consumer durables fell 28.0%, after rising 24.7% in the first half and by 15.1% in the corresponding period in 2007. The fall in consumption was particularly marked in per capita purchases of motor vehicles, which fell by an annualized 56.6% in the second half of 2008 after rising at a rate of 70.5% in the first half. Per capita spending on furniture fell 15.2% in the second half of 2008, after rising at an annual rate of 7.1% in the first half, while purchases of domestic equipment (refrigerators, washing machines, air conditioners, and so on) fell by an annual 4.4% per capita in the second half of 2008, after rising at a rate of 5.4% in the first half.”

It sure doesn’t look good. Let’s see if Benjamin Netanyahu can put together a ruling coalition sooner rather than later, and implement his economic plan. Otherwise, look for continued contraction from the Israeli economy in coming quarters.

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