Nitzan Shecter, head of the bureau's national accounts division, said Israel's growth this year exceeded an OECD average of 2.1 percent but not when taking population growth into account. Overall, the economy produced 1.26 trillion shekels ($362 billion) this year. Israel's per capita growth was just 1 percent, half that of the OECD, Shecter told a news conference.
The Bank of Israel forecasts 3.3 percent growth in 2018. Economic growth was impacted by slower gains in private spending - 55 percent of the economy - and investment in fixed assets. Private spending rose 3 percent, while investment grew 2.7 percent.
Public spending growth also slowed, while exports were largely flat at a 2.3 percent increase. The bureau said service exports continued to grow, reaching 44 percent of total exports, up from 36 percent in 2014.
Economists said growth this year was also impacted by changes to the way cars are taxed at the start of 2017. Growth late in 2016 was boosted by a spike in sales of vehicles that occurred before the tax hike - which ties the tax payable at purchase to the car's carbon emissions. This also negatively impacted the first three months of 2017.
One potential problem for the economy is a tight labour market, with the jobless rate at 4.3 percent in November. Daniel Roash, head of the bureau's main economics indicators division, said there were more than 100,000 jobs open in Israel. The data are not expected to have an impact on interest rates. The Bank of Israel has held its benchmark interest rate at 0.1 percent for close to three years and is expected to stay on hold until at least late 2018 given an inflation rate that is still below a 1-3 percent annual target.
In the third quarter, the bureau revised gross domestic product growth to an annualised rate of 3.5 percent from a preliminary estimate of 4.1 percent last month, with most of the downward revision stemming from smaller growth in exports.