Israel's economy is expected to have grown 1.2% in the fourth quarter from the previous three months under a new short-term forecasting model announced by the Bank of Israel on Wednesday, which it says will reduce errors by 10%.
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The Central Bureau of Statistics will issue its preliminary fourth-quarter gross domestic product estimate on Feb. 16.
The central bank said the new model will join a host of others that will help it to make more accurate economic growth predictions.
It noted that official GDP data is published with a long lag so its new "nowcasting" model will forecast GDP "that has occurred but for which an estimate has not yet been published". This, the central bank said, will enable it to make better monetary policy decisions.
The new model is based on 30 sets of data with monthly frequency, such as imports, exports, revenue data based on VAT, tax revenue and employment data. It will estimate the GDP figure in the middle of the quarter and three months before the initial data will be published by the Statistics Bureau.
The model showed that the first lockdown at the outset of the COVID-19 pandemic had three times greater impact on economic activity than the subsequent two lockdowns, with the moderation attributed to adjustments made by businesses that enabled them to work better under lockdown conditions.
The central bank estimates Israel's economy grew 6.5% last year.
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