Israel Economic Outlook
March 10, 2020The economy expanded strongly in the fourth quarter of last year according to recent data, although the figures were flattered by a front-loading of vehicle purchases distorting consumption and investment. Underlying momentum was more modest, albeit still solid. Turning to 2020, economic growth is likely ebbing in the first quarter. While economic activity growth was robust in January according to the Central Bank’s State of the Economic Index, the manufacturing PMI dipped in the same month on lower export demand, while fiscal policy has turned contractionary due to the lack of an approved 2020 budget. Moreover, a likely drop-off in vehicle sales could artificially depress Q1’s headline GDP reading. In politics, the March elections yielded an inconclusive result, with neither the right- nor left-wing blocs securing a majority in the Knesset. This could spell further political paralysis going forward.
Israel Economic GrowthThe economy should perform fairly well this year notwithstanding the current lack of a government, underpinned by a healthy labor market, population growth and gas exports from the new Leviathan field. However, global trade tensions, volatile regional geopolitics and the coronavirus outbreak pose downside risks. FocusEconomics analysts estimate growth of 3.1% in 2020, which is unchanged from last month’s forecast, and 3.3% in 2021.
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|Bond Yield||0.98||-1.69 %||Jan 01|
|Exchange Rate||3.46||-0.37 %||Dec 31|
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Israel Economic News
February 24, 2020
At its 24 February meeting, the Monetary Committee of the Bank of Israel (BoI) kept the key interest rate unchanged at 0.25%, in line with market expectations. The Bank continued to view FX market intervention, rather than monetary easing, as the most effective way to tackle the strong shekel and stubbornly low inflation—which was below the 1.0%–3.0% target range for the eighth straight month in January.
February 23, 2020
The Bank of Israel’s Composite State of the Economy Index rose 0.25% in January compared to the previous month in seasonally-adjusted terms, down marginally from December’s 0.26% expansion.
February 19, 2020
The Purchasing Managers’ Index (PMI), produced by Bank Hapoalim and the Israeli Purchasing & Logistics Managers Association (IPLMA), fell from 51.8 in December to 50.1 in January, remaining just above the neutral 50-mark separating expansion from contraction in the manufacturing sector.
February 16, 2020
The economy expanded 4.8% in quarter-on-quarter, seasonally-adjusted annualized rate terms (qoq SAAR) in the fourth quarter, up from Q3’s revised 4.5% growth (previously reported: +4.2% qoq).
February 14, 2020
Consumer prices fell 0.4% in January over the prior month, down from December’s flat reading.