Note that Israel's GDP fell by 19.4% in the fourth quarter, which is "annualized quarter-on-quarter", not "year-on-year"

As the Palestinian-Israeli conflict has seriously affected household consumption and investment, Israel's economic development trend in the fourth quarter of 2023 "turned from growth in previous quarters to decline", and led to a slowdown in real GDP growth to 2% in 2023 from 6.5% in the previous year.

Note that the year-on-year decline in GDP in the fourth quarter was not 19.4%

As for the report of Israel's GDP decline in the fourth quarter, the Internet usually looks like this: Affected by the outbreak of a new round of conflict between Palestine and Israel, Israel's economy fell by nearly 20% in the fourth quarter of last year - such an introduction is not rigorous, but it is barely acceptable.

What is unacceptable is this statement: the economy fell by 19.4% year-on-year in the fourth quarter of 2023, making it the first time that the Israeli economy experienced negative growth in a single quarter since the end of the pandemic.

Compared with the above two reporting methods, the Global Daily is more professional and rigorous, writing that in the fourth quarter of 2023, Israel's GDP "contracted at an annualized rate of 19.4% quarter-on-quarter", becoming the worst single-quarter decline since the global pandemic.

Next, Nansheng shared GDP growth data under various criteria

The first is the "year-on-year" that we Chinese people are accustomed to, that is, the GDP in the fourth quarter of 2023 compared to the fourth quarter of 2022, and after excluding the changes in the prices of various goods and services, we get the real level of development - the Israeli economy fell by 4.1%.

Israel's nominal GDP expansion in the fourth quarter of 2023, driven by inflation, was NIS 471,185.8 million, compared with NIS 469,745.2 million in the same period of the previous year," the Israeli National Statistics Office wrote.

Taking into account rising prices, Israel's economy "ostensibly increased by 0.3 percent" in the fourth quarter. But when the impact of rising prices is excluded, Israel's economy "contracted by 4.1 percent in real terms year-on-year." The actual two words can be omitted, so it is written: Israel's economy shrank by 4.1% year-on-year.

Looking at the "quarter-on-quarter", i.e., the comparison of GDP in the fourth quarter of 2023 with the third quarter of 2023, it is also necessary to exclude price changes and use the "calendar-adjusted and seasonally adjusted criteria" – "seasonally adjusted" for short.

In the fourth quarter of 2023, on a calendar- and seasonally adjusted basis, Israel's GDP contracted by 5.2% in real terms, a decrease of 5.9 percentage points compared to the previous quarter's "0.7% quarter-on-quarter increase".

Next is the key point, which fell by 19.4% as "month-on-month annualized"

That is, the Global Daily said that "the annualized rate contracted by 19.4% month-on-month", and there are "month-on-month" and "annualized rate" in these words, which are all key points, which means: the economic quarter-on-quarter rate of the current quarter will be expanded to the value obtained after a full year.

I'll give you an example, let's say Nansheng invests 10,000 yuan in stock speculation and earns 1,000 yuan in a single quarter, and the total amount becomes 11,000 yuan, with a yield of 10%. In the next quarter, on this basis, the income was another 10%, and the total amount became 12,100 yuan.

Then, assuming that the yield in the following quarters remains unchanged at 10%, the total amount after a whole year becomes 14,641 yuan, and the annualized rate of return obtained is 46.41%, which is written as 46.4% after rounding - this is the annualized effect of a 10% yield in a single quarter.

The above example can also be changed to "assume a loss of 10% every quarter", so that the amount will drop to 6,561 yuan after a whole year, which is a decrease of 3,439 yuan, or 34.39%, compared with the principal of 10,000 yuan———— which is the annualized effect of a 10% decrease in a single quarter.

In the fourth quarter of 2023, Israel's economy shrank by 5.2% quarter-on-quarter. Then assume that the Israeli economy will "shrink by 5.2% quarter-on-quarter in a single quarter" for the next three quarters, resulting in a 19.4% decline in the first four quarters – that is, a full year later.

But the question is, will the quarter-on-quarter decline in the Israeli economy really remain unchanged over the next three quarters? Of course not, there has never been a specific indication in history that a country's quarterly economic development trend has remained stable and unchanged, from which we can draw the following conclusion:

Annualizing the quarter-on-quarter growth rate of a single quarter, the resulting value, the standard name is Annualized Quarter-on-Quarter (also known as Annualized Quarter-on-Quarter Rate), is simply a simple and easy technique for forecasting short-term trends.

The advantage of using this method of measurement is mainly to highlight the trend of economic changes in a single quarter - magnify it by about four times, so that economic policymakers, analysts, and researchers can more easily grasp the short-term economic fluctuations and formulate corresponding strategies.

Do you still remember the news that the United States fell by 32.9% in the second quarter of 2020 and soared by 33.1% in the third quarter? At that time, Nansheng wrote that the 33.1% increase was an annualized month-on-month increase, and it still fell by 2.8% from a year-on-year perspective (as shown in the figure below), and it did not achieve a complete recovery.

Finally, it should be emphasized that this article is not to maintain the four-color column, but only to emphasize that we media need to convey correct knowledge to everyone when reporting economic information. On the issue of the Palestinian-Israeli conflict, Nansheng supports Palestine and has written many articles criticizing Israel. This article is written by Nansheng, and reprinting and plagiarism are strictly prohibited!