The Israeli economy appeared to be more balanced in the first half of 2018, as it is more inclined to export and less to private consumption, according to the report on the first half of 2018 published by the Bank of Israel on Sunday.
The trend was also reflected in the continuing tightening in the labor market during the past two years, in which there was a high level of job vacancies with a low unemployment rate, as well as significant rise in wages.
The Bank of Israel predicted that the GDP will grow in 2018 and 2019 by 3.7 percent and 3.5 percent, respectively.
For the first time in 10 years, housing prices in Israel decreased in the half-year period, according to the Bank of Israel.
The decline stemmed from a drop in demand and an increase in supply, mainly as a result of a governmental program encouraging the purchase of one's first apartment with preferential terms, especially for young couples.
The report also reviewed the five interest rate decisions made during this period, leaving the rate unchanged at 0.1 percent.
The decisions were made based on the low inflation, the expansionary monetary policy of leading economies, the stability in the shekel exchange rate, the moderation in the housing market, and the improvement in economic activity in Israel and around the world.
During the first half of this year, Bank of Israel continued to intervene in the foreign exchange market, the report said.
Annual inflation witnessed a moderate rise to reach 1.3 percent during this period, hitting the target for the first time in four years.
The effective exchange rate of the shekel fluctuated around a relatively stable level, after it showed stability in the second half of 2017.
Annual inflation is expected to remain within the target range in the second half of 2018 to reach 1.2 percent at the end of the year and 1.5 percent in 2019.
The interest rate is expected to remain at 0.1 percent until the third quarter of 2018, and to rise in the fourth quarter to 0.25 percent, the report added.
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