Israeli economy grew at a 1.5 percent rate in the second quarter of 2014, marking its lowest level in the past five years, the country's Central Bureau of Statistics said Tuesday in a statement.
The decline of the gross domestic product (GDP) was sharper than previously expected. Last month, the Central Bureau of Statistics estimated the economy will grow at an annual rate of 1. 7 percent during the April-June period.
However, the actual growth was in fact lower, mainly due to a larger drop in exports than initially expected. Export represents about 40 percent of Israel's economy and steeply declined in the second quarter of 2014 by a 19.8 percent.
The Central Bureau of Statistics also revised the growth in the first quarter from 2.8 percent from 2.7 percent. As a result, the overall GDP in the first six months of the year was scaled down to 2.3 percent from 2.5 percent.
Bank of Israel has estimated the growth will further decline by at least 0.5 percent in the third quarter due to Israel's recent 50-day long war in the Hamas-ruled Gaza Strip and slowing global trade.
The war hit tourism, causing a 32 percent decline in August, dented industrial activity close to the border, and slowed down consumer spending as people were less inclined to leave home.
According to the Bank of Israel governor Karnit Flug, "the experience from previous security-related events teaches that most of the effect is temporary, and after the fighting ends the economy recovers rapidly. An exception is the tourism industry, which generally only returns to pre-hostilities levels after about a year."./.