JERUSALEM - Israel's economy contracted in the first quarter after a robust 2021, led by declines in exports and in consumer and government spending, the Central Bureau of Statistics said on Monday.
Gross domestic product shrank an annualised 1.6% in the January-March period from the prior three months - compared with a forecast in a Reuters poll of analysts of a 2% rise.
Excluding net taxes on imports, the economy fell by 3%.
Israel's economy grew at a 21-year high rate of 8.2% in 2021 and is expected to grow a further 5.5% in 2022, according to the Bank of Israel.
The growth data come after the bureau on Sunday said Israel's inflation rate reached 4% in April, the first time it has hit 4% since mid-2011.
The need to rein in inflation combined with a strong economy led central bank policymakers a month ago to embark on a tightening cycle. The benchmark interest rate was raised by a quarter-point to 0.35% and is expected to rise gradually throughout 2022, including the bank's decision next Monday.
After sharp gains in 2021, private spending -- the economy's main growth engine -- cooled in the first quarter of 2022, declining 0.7%. Exports, another key growth driver, slipped 11% but excluding diamonds and start-up companies exports fell just 6.1%.
Government spending dipped 7%, while imports rose 17.3%.
The lone bright spot was in investment, which rose 3.3% in the first quarter. All of that gain was in residential building, which more than offset declines in industrial investment.
(Reporting by Steven Scheer, Editing by Ari Rabinovitch and Toby Chopra)