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Economy in Brief

Q2 GDP Eases in Greece & Falls in the Palestinian Territories But Gains in Israel
by Carol Stone August 16, 2006

Three Mediterranean regions reported Q2 GDP today. In Greece, total GDP eased 0.3% from Q1, Israel saw growth of 1.5% and the Palestinian Territories' GDP fell 1.7%.

The Greek data featured a decline in domestic demand in Q2 after it rose sharply in Q1. The Q2 figures included a reduction in consumption and what might be termed a "correction" in fixed investment. This latter had been up strongly for three quarters running, so the latest period's decrease still left year-on-year growth of 14.0%, a nice recovery after a contraction in 2005. Consumption is somewhat steadier, maintaining four-quarter growth rates between 3% and 4%. Q2 total GDP was supported by an improvement in net exports. Country-source data for Greece are included in Haver's ALPMED database, with summary statistics in G10 and EUROSTAT. While the first two are updated by Haver soon after the data are released, the figures in EUROSTAT are available to us only after their staff have released them through their own channels and that database generally includes them some time later.

Israel's total GDP growth has been fairly steady at about a 6% annual pace for the last year, reflecting moderate gains in consumption and investment and strong exports. Obviously, these are Q2 data and do not cover any of the Israel/Hezbollah conflict, which began July 12. While economic impact is hardly a high priority in analyzing this war right now, the even-tempered performance of Israel's economy going into it will provide for interesting comparisons when Q3 data are produced.

The Palestinian Territories have a tiny economy, with GDP for 2005 totaling only $4.46 billion in fixed 1997 prices. The first two quarters of this year were weak, with a steep drop of 7.2% in Q1 followed by 1.7% in Q2. Recent data are available only for industrial sectors (not for expenditure categories), and these sectors are experiencing varied patterns. The latest declines came in industry and construction, while transportation is erratic but maintaining a modest growth trend. As with many of the world's organized economic areas, the service sector is expanding with some vigor, and Q2 was up 16.5% from a year ago. One hopes that has been maintained this quarter despite the tumult around them.

Data on Israel and the Palestinian Territories are contained in Haver's EMERGEMA database.

GDP: % Changes Q2 2006 Q1 2006 Q4 2005 Yr/Yr 2005 2004 2003
Greece* -0.3 2.8 -0.2 4.1 3.7 4.7 4.8
  Consumption -1.1 1.5 0.5 3.5 3.6 4.4 3.1
  Fixed Investment -4.7 7.4 4.5 14.0 -1.2 5.7 13.7
Israel* 1.5 1.4 1.4 6.2 5.2** 4.8** 1.5**
  Consumption 1.2 1.8 0.0 2.7 3.1** 2.8** -0.3**
  Fixed Investment -2.4 2.2 2.2 3.1 2.9** 0.3** -5.5**
Palestinian Territories* -1.7 -7.2 2.3 1.7 4.9 -- --
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