JERUSALEM: Israel's economy grew an estimated 3.3 percent in 2012, its slowest pace in three years due to scant export growth, but still outperformed many other developed countries.
Growth slowed from a 4.6 percent spurt in 2011, mainly due recessions in Europe, Israel's largest trading partner, weak growth in the United States and slower growth in Asia.
Consumer spending and investments also grew more slowly in 2012 than a year ago, although public spending rose.
But while it lagged emerging economies such as China, which grew 7.5 percent, Israel strongly outpaced the 1.4 percent average growth rate for Western nations.
"Given the international situation, the Israeli economy is doing very well," Shlomo Yitzhaki, the government's statistician, told a news conference on Monday.
The Bank of Israel predicts even weaker growth in 2013. Last week, it lowered short-term interest rates for the second time in three months, taking the key rate to 1.75 percent, and also lowered its 2013 growth projection to 2.8 percent from 3.0 percent, excluding natural gas output.
Israel's growth was in line with central bank and Finance Ministry estimates but the weakest since 1.1 percent in 2009, falling short of the bureau's initial estimate of 3.5 percent.
Europe's troubles held back Israeli exports - more than 40 percent of economic activity - which grew 1 percent this year, largely due to a 22.1 percent drop in diamond exports, versus a 5.5 percent gain in 2011. Some 35 percent of exports go to recession-hit Europe.
Excluding diamonds, exports grew 4.2 percent this year.
Private spending growth slowed to 2.8 percent, while investment in fixed assets grew 3.7 percent, down from 16 percent in 2011. Government spending rose by 3.7 percent, faster than 2.9 percent last year.
For the third quarter, the economy grew an annualised 2.8 percent, below a previous estimate of 2.9 percent and the slowest pace since the second quarter of 2009.
Exports in the quarter slipped 5.6 percent, while imports slid 11.9 percent. Private spending edged up 0.5 percent and investment in fixed assets dipped 6.0 percent despite a rise in residential building investment.
Center>Copyright Reuters, 2012
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