JERUSALEM, Oct. 22 (Xinhua) -- The Bank of Israel has lowered its forecast for this year's GDP growth from 3.4 percent to 3.1 percent, while remaining the 2018 growth forecast at 3.3 percent.
The inflation rate by the end of the third quarter of 2018 is expected to be 1 percent, according to the bank.
It is expected that the Bank of Israel would remain its interest rate at the current level of 0.1 percent until the third quarter of 2018, while to increase to 0.25 percent in the fourth quarter of 2018.
"The relatively low first-half growth data led to a downward revision of the forecast for 2017, to 3.1 percent, but as noted this reflects development that has already occurred, and there is no change in the growth forecast for 2018 at 3.3 percent," said Bank of Israel Governor Karnit Flug.
"The forecast reflects a gradual shift to growth based less on private consumption and more on exports, supported by improvement in world trade, after recent years of growth driven by private consumption," said the governor.
According to the central bank, private consumption would see a year-on-year growth of 3 percent in 2017 and 3.5 percent in 2018 respectively, while the data in 2016 was 6.1 percent.
"The greater-than-expected decline in inflation in recent months led to the inflation rate only being expected to enter the target range in the third quarter of 2017, and the interest rate path is slightly lower than what was presented in the previous forecast," said Flug.
According to figures recently released by the Central Bureau of Statistics, price inflation in Israel for the past twelve months till the end of September was merely 0.1 percent, well below the government target range of 1-3 percent.