By Steven Scheer
JERUSALEM (Reuters) - Israel's economy grew at an annualized 1.4 percent in the first quarter, slightly higher than previously thought due to an improvement in exports, but still its slowest pace in almost two years.
In a second estimate last month, the Central Bureau of Statistics had said gross domestic product <ILGDP=ECI>
grew 1.2 percent in the first three months of the year, down from a preliminary 1.4 percent rise -- well below a Reuters forecast of 3.7 percent.
It was the slowest growth rate since the second quarter of 2015. On a per capita basis, GDP in the quarter fell an annualized 0.5 percent.
Fourth-quarter growth was revised to an annualized 4.7 percent from 4.6 percent, the bureau said on Sunday.
Growth in the final three months of 2016 had been boosted by one-off factors including a spike in sales of vehicles that occurred before the tax hike -- which ties the tax payable at purchase to the car's carbon emissions -- at the start of 2017. This also negatively impacted the first three months of 2017.
Analysts said given the distortions, a more accurate figure was GDP excluding net taxes on import -- which eliminates much of the one-time auto effect. It rose an annualized 3.3 percent in the first quarter, revised up from a previous 3.1 percent.
Citing expectations that exports look to improve as global trade strengthens, the Bank of Israel last week raised its economic growth estimate for 2017 to 3.4 percent from a previous 2.8 percent and left its 2018 forecast unchanged at 3.3 percent. Growth was 4 percent in 2016.
In the first quarter, exports - which comprise more than 30 percent of Israeli economic activity - grew 8.7 percent compared with a 7.8 percent gain in the prior estimate. Private spending dipped 1.1 percent versus a 1.7 percent drop, while investment in fixed assets fell by 3.4 percent. Imports shed 9.3 percent and government spending was up 2.6 percent.
The data comes after the bureau said that Israel's annual inflation rate fell 0.2 percent in June from a 0.8 percent rise in May.