Israel revises up economic growth forecast for 2016

Israel's central bank on Sunday revised up the country's economic growth forecast for 2016, citing projections of increased investments and exports.

According to a quarterly research paper by the central bank, Israel's gross domestic product (GDP) is expected to expand in an annual pace of 3.5 percent in 2016.

The upwards revision from a previous estimate of 3 percent was made mainly due to recovery in investments, which fell 1.7 percent in 2014.

In 2015, investments are expected to increase by 2 percent and then to further climb by 7.2 percent in 2015.

The chief sources of growth in investments would be an anticipated expansion of residential construction and a 5.8 billion dollars investment by the giant U.S. chip-maker, Intel, in the upgrade of its chip manufacturing plant in southern Israel.

"Most of the investment would be spent on machinery and equipment," the bank's notice read.

Last year, Intel and the government of Israel finalized an agreement to upgrade the plant and create 1,000 new positions by 2023, in return to a government grant of 300 million dollars and tax breaks.

Exports, which account for about 40 percent of the Israeli economy, are expected to raise from 4.4 percent in 2015 to 5.3 percent in 2016, "amid expected acceleration in imports in developed countries," the bank said.

Growth forecast for 2015 has remained unchanged at 3.2 percent.

Israel's economy, which was hit hard by last summer's Gaza war, grew by only 2.9 percent in 2014, just below a 3.2 percent growth pace in 2013. Endit