In Israel, income can't keep up with GDP growth
Israel's GDP in Q4 2010 grew by 1.9% (7.8% at an annualized rate) compared to the previous quarter and 5.6% compared to a year earlier.
This is very impressive considering that unlike most other rapidly growing economy Israel didn't experience a recession in 2009 (only a slowdown from previously high growth levels) and so its growth doesn't contain as big element of cyclical rebound as other economies with relatively high growth like Sweden, Estonia, Finland and Germany.
It is particularly the high tech sector that drives growth, with for example Intel investing and expanding their operations in Israel significantly.
However, though by any measure Israel's performance in recent years have been impressive, in part due to the free market reforms that have been implemented, it should be noted that average income grows slower than GDP due to Israel's high population growth.
As a result, while Israel's GDP growth during the latest year has been significantly higher than Germany's (5.6% versus 4%), its per capita growth has been somewhat lower because Israel's population grows by 1.8% per year while Germany's population is shrinking.
Add/view comments on this post.
------------------------------
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.
