* Israel economy jumps 4.7 percent in Q2, beating forecasts
* Exports and consumer spending lead the way
* Data may add pressure for rate hikes in months ahead
(Adds details, economists quotes)
By Steven Scheer
JERUSALEM, Aug 16 (Reuters) - Israel's economy grew at its strongest pace in more than two years in the second quarter as domestic demand and exports surged, official data showed on Monday, easily exceeding analyst forecasts.
Annualised quarterly growth rose 4.7 percent in the April-June period, the Central Bureau of Statistics said in an initial estimate. A Reuters survey of 8 analysts had forecast a 3.0 percent increase.
The data may put more pressure on Bank of Israel Governor Stanley Fischer to further tighten monetary policy, although he has recently cautioned that growth may weaken in the second half of the year due to slower exports.
"It shows that there is a bit of a disconnect with the situation in Europe. Israel is in a stronger position than Europe," Shlomo Maoz, chief economist at the Excellence Nessuah brokerage, said of Monday's GDP figure.
Aggregate GDP growth rate in the 16-country euro zone was 1.0 percent in the second quarter from the previous quarter.
Consumer spending in Israel jumped 8.7 percent in the quarter, while exports, which make up 40-45 percent of economic activity, grew 15.8 percent as sales continued to rebound from the global financial crisis.
The data come a day after the bureau reported annual inflation fell to a rate of 1.8 percent in July, although the Bank of Israel earlier on Monday reported that bond market expectations for inflation over the next 12 months edged up to 3.0 percent last month.
The central bank raised its benchmark lending rate on July 26 by a quarter-point to 1.75 percent, largely to combat rising inflationary pressures stemming from surging housing prices. It was the fifth increase in the past year.
"The (rates) trend is clearly upwards," said HSBC economist Jonathan Katz, who expects two more quarter-point moves this year. "If you take into consideration that unemployment is also coming down, the output gaps are shrinking and the fact that there is a bubble in the housing market, all these factors will contribute to further rate hikes this year."
REVISIONS
Excluding government spending, Israel's economy grew 6 percent in the second quarter.
The statistics office also revised first quarter growth up to 3.6 percent from a previous 3.4 percent, but cut fourth-quarter 2009 GDP to 4.3 percent from 4.4 percent.
"They are strong and surprising numbers. It's growth across the board," said Gil Bufman, chief economist with Bank Leumi.
"But the numbers have to be taken with a grain of salt because they tend to be revised quite substantially," he said, specifically citing volatile export figures.
Investment in fixed assets grew 10.9 percent, while imports rose 8.3 percent. Public spending growth slowed to 1.4 percent, the statistics bureau said.
The quarterly growth figure was the strongest since the first quarter of 2008, when the economy expanded 6.9 percent.
For the first half of 2010, the economy grew 4.1 percent.
Israel's economy expanded 0.7 percent in 2009 and the Bank of Israel projects growth of 3.7 percent this year.
Bufman said the 2010 estimates look to be on track. But he doubted that government and central bank projections of 4 percent growth in 2011 could be met.
"The way things are looking in the world with a bit of a slowdown, it will be pretty difficult to see a second year of growth of 4 percent in 2011," he said.
Key Tel Aviv share indexes were modestly higher, while the shekel was slightly weaker versus the dollar. But bond prices were up as much as 0.7 percent. For tables, please click: http://www.cbs.gov.il/reader/newhodaot/tables_template_eng.html?hodaa=201008187 (Additional reporting by Ari Rabinovitch and Joseph Nasr; editing by Stephen Nisbet)