We remain optimistic on Israel's consumer outlook over our five-year forecast period to 2021.
The rise in inflation in 2017 will not be substantial to weigh on the consumer outlook as inflationarypressures still remain low by historical standards. The country's stable labour market will also underpinnedour favourable consumer outlook over 2017-2021.
We have revised up our GDP growth forecasts to 3.5% in 2017, against 3.3% previously. Real GDP growthcame in at 4.7% y-o-y in Q416, marking a significant uptick from 2.3% y-o-y reported in Q415.While webelieve that the spike in growth was partly due to base effects, strong fundamentals underpinned bysustained strength in fixed investment and private consumption will continue to support economic activityover the coming quarters.
Private consumption will remain the main driver of economic growth in 2017 and beyond, supported byfavourable labour market dynamics and accommodative fiscal and monetary policies. After an exceptionalyear of 6.3% growth real growth in private consumption in 2016, we forecast another strong year of 4.0% in2017, which will remain unchanged and sustainable through to 2021.