Israel Economic Activity February 2022

Israel: Composite State of the Economy Index drops in February

The Bank of Israel’s Composite State of the Economy Index slid 0.08% month-on-month in seasonally-adjusted terms in February (January: +0.06% mom), likely linked to the fifth wave of Covid-19 cases at the outset of the year. The reading was negatively affected by February’s lower exports and imports of goods, and imports of manufacturing inputs. This more than offset strong retail trade and industrial production growth in January. The index is calculated using the latest available data and hence uses a combination of figures from recent months to provide a comprehensive picture of the economy’s performance.

On an annual basis, economic activity rose 2.9% in February, which was below January’s 3.3% expansion.

Going forward, the sharp fall in Covid-19 cases in recent weeks, as well as the government’s recent decision to open borders to all tourists regardless of their vaccination status, should have supported economic activity in March.

On the outlook further ahead, analysts at the EIU commented:

“The high-technology sector—especially technology service exports—will continue to drive growth, but other industries will also gather pace. Intermittent disruptions from new variants will hamper some consumer-focused domestic businesses; rising inflation will also dampen consumer demand growth among lower-income Israelis. However, proactive pandemic management, pent-up demand and real wage growth will ensure that ongoing private consumption growth will be maintained.”

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