Israel is officially out of recession after the Central Bureau of Statistics reported that the country’s economy grew 2.2 per cent on an annualised basis in the third quarter of 2009.

This followed 1 per cent growth in the second quarter.

Israel was one of the last Western countries into recession, enjoying growth of 4 per cent last year despite a contraction of 1.6 per cent in the fourth quarter of 2008. The recession hit hardest in the first quarter of this year, when the Israeli economy contracted by 3.2 per cent.

“The situation is good but still not impressive,” said Bank of Israel Governor Prof Stanley Fischer. “We have successfully come through the crisis with the least damage of any Western economy. Growth is not yet high enough to influence unemployment, which at 8 per cent is still very high. The recovery of Israel’s high-tech exports has been especially impressive and exports are rising faster than imports.”

Growth in the second quarter was led by exports of goods and services, which rose by 21.8 per cent on an annualised basis after a 14.6 per cent rise in the second quarter. This reflects the recovery in the global economy.

Private consumption rose by 8.9 per cent in the third quarter, with spending on durable goods soaring 51.5 per cent. The Bank of Israel had forecast zero per cent growth in 2009 and 2.5 per cent growth next year but is now expected to revise these figures upwards.

Prof Fischer said that inflation in 2009 would be above 3 per cent, missing the government’s target, due to tax increases. He also stressed that he will continue buying foreign currency to halt the strengthening of the shekel despite heavy criticism of his policies last week by an OECD report.