Israel Economic Outlook
September 7, 2021GDP expanded robustly in Q2 due to improvements in private consumption, public spending and fixed investment, amid the rollback of Covid-19 restrictions. Meanwhile, the expansions in exports and imports were broadly similar to Q1. Turning to Q3, the Composite State of the Economy Index expanded solidly in July. However, momentum has likely eased since then due to a surge in Covid-19 cases and the snapback of some restrictions: In August, the government reimposed limits on gatherings and made it compulsory to show proof of vaccination in order to enter public venues. Vaccine boosters are currently being rolled out in a bid to avoid tougher measures. In other news, the cabinet agreed on the 2021–2022 budget in early August, along with a set of fairly ambitious economic reforms. However, parliamentary approval is not guaranteed given the government’s wafer-thin majority.
Israel Economic GrowthThe economy will grow strongly this year thanks to the successful vaccination campaign and recoveries abroad. Improving relations with Arab neighbors also bode well for activity. Downside risks include possible infighting within the governing coalition, further conflict with Palestine and the potential for additional restrictions if Covid-19 cases stay elevated. FocusEconomics analysts see the economy expanding 5.3% in 2021, up 0.5 percentage points from last month’s forecast, before growing 4.2% in 2022.
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Israel Economic News
Israel: Government presents supportive 2021–2022 budget and growth-enhancing reforms, but Knesset approval still not guaranteed
September 6, 2021
In early August, the government presented the 2021–2022 budget, which aims to narrow the fiscal deficit gradually while continuing to aid the recovery from the Covid-19 crisis.
August 23, 2021
The Bank of Israel’s Composite State of the Economy Index rose 0.21% in month-on-month seasonally-adjusted terms in July, which followed June's 0.16% increase.
August 23, 2021
At its 23 August meeting, the Bank of Israel (BoI) left the policy rate at 0.10%. The decision to keep rates stable at their current low level was likely driven by the domestic surge in Covid-19 cases and reimposition of some restrictions, which has injected some uncertainty into the economic outlook.
August 23, 2021
The Manufacturing Purchasing Managers’ Index (PMI), produced by Bank Hapoalim and the IPLMA came in at 46.8 in July, down from June's 51.5.
August 16, 2021
Economic activity bounced back in the second quarter, expanding 15.4% in seasonally-adjusted annualized rate terms (SAAR), contrasting the 1.4% contraction seen in the first quarter.