By Steven Scheer

JERUSALEM, (Reuters) – Israel’s economy grew at the fastest rate in 21 years in 2021. This was despite double-digit growth in consumption spending and exports, which were resuscitated after a weak 2020, which was slowed by the coronavirus epidemic.

The Central Bureau of Statistics reported Wednesday that the economy experienced 8.1% growth last year. That’s well over the Bank of Israel’s 6.5% forecast and is a strong rebound from the 2.2% contraction for 2020.

The Bureau noted that Israel saw a record year of growth last year, which was much higher than the 5.3% average for the OECD.

According to the central bank, growth is expected at 5.5% by 2022. The central bank has not said that it will raise interest rates in an immediate rush, but faster inflation and higher growth could prompt them to support hikes made by European peers.

Israel has a benchmark rate of 0.1%.

The bureau announced Tuesday that January’s annual inflation rate of 3.1% was above government targets range (1-3%) for the first-time in over a decade.

Israel, like many countries in the world, was hit by the 2020 pandemic. There were also a number of lockdowns that had to be taken place to stop COVID-19 contagion. However, the rapid rollout of vaccines in 2021 led to the reopening the economy. The exception being the tourism industry.

Israel only opened up to tourists from abroad in recent years.

Consumption, which is half of the economy, increased by roughly 12% in 2021. Exports, another important growth driver, gained nearly 14% in spite of a stronger shekel, and investment in fixed assets was up 10.5%.

The fourth quarter of 2021 saw an increase in gross domestic products of 16.6% annually compared to the previous three months according to a preliminary estimate. That is higher than the 5% predicted in a Reuters poll.

Private spending increased 19.2% and exports rose 26.3%. Investment grew 14.1%. In addition to the sharp rise in government spending, imports also grew strongly over the past three months.

The third quarter GDP growth rate was revised from 2.7% to 6.7%.

Israel’s 2021 growth was at its fastest pace since 2000 when it registered 8.9%.