Israel Economic Activity May 2024

Israel: Composite State of the Economy Index rebounds in May

The Bank of Israel’s Composite State of the Economy Index expanded 0.04% in month-on-month seasonally adjusted terms in May, which contrasted April’s 0.08% decrease. The Index was positively influenced by increases in imports of consumption goods and manufacturing inputs, industrial production, services revenue, employee posts, and building starts. In contrast, declines in goods exports, credit card purchases, and retail trade negatively influenced the Index.

On an annual basis, economic activity fell at a sharper rate of 1.7% in May (April: -1.4% yoy), the worst result since November 2023.

Despite May’s slight month-on-month rebound, economic activity remains smaller than its level before the war with Hamas broke out in October 2023, and May’s expansion was less than half the average rate recorded in the year before the war.

On the outlook, EIU analysts said:

“We expect a surge in government consumption to be sustained over the course of 2024. However, this will not fully offset the impact on growth of security restrictions, the dampening of private consumption and weakening domestic and foreign investment. We do not expect the economy to return to its pre-war level until end-2024.”

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