Consumption in Israel
Israel - Consumption
GDP records largest fall on record in Q2, only mild recovery expected for Q3
GDP contracted at a quicker pace of 28.7% in seasonally-adjusted annualized terms (SAAR) in the second quarter, below the 6.8% contraction logged in the first quarter and marking the worst reading on record.
On the domestic front, the downturn reflected contractions in private consumption and fixed investment. Private consumption declined at a steeper pace of 43.4% SAAR in Q2 from the 24.0% fall in Q1, due to the strict lockdown. Fixed investment fell at a sharper rate of 31.6% in Q2, from the 19.3% contraction recorded in the prior quarter. Public spending, meanwhile, grew at the fastest pace ever recorded, expanding 25.2% (Q1: -12.5% SAAR) as the government implemented fiscal stimulus measures.
Exports of goods and services contracted 29.2% in Q2 (Q1: +5.7% SAAR). In addition, imports of goods and services shrank at a more pronounced pace of 41.7% in Q2 (Q1: -22.4% SAAR).
On an annual basis, economic activity fell 6.7% in Q2, contrasting the previous quarter's 0.3% expansion.
Looking forward, while economic activity will recover somewhat in H2, the rebound will be hampered by elevated new Covid-19 cases, which led to the snap-back of some restrictions in July and risk further lockdown measures ahead. Economic activity in July only expanded meekly according to the Composite State of the Economy Index, following five consecutive months of contraction.
According to Padmasai Varanasi, an economist at Oxford Economics:
“We have lowered our 2020 GDP forecast for Israel to -7.0% (from -6.0% last month) owing to the imposition of partial lockdowns as coronavirus infections have surged. All components of GDP except government consumption have been hit sharply by the outbreak, and earlier assumptions of a gradual recovery from Q3 2020 are pushed further out.”
FocusEconomics analysts see the economy shrinking 5.5% in 2020, which is down 0.5 percentage points from last month’s forecast, before growing 4.7% in 2021.
Israel - Consumption Data
|Consumption (annual variation in %)||3.8||5.7||3.3||3.8||3.8|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.98||-1.69 %||Jan 01|
|Exchange Rate||3.46||-0.37 %||Dec 31|
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September 29, 2020
The Bank of Israel’s Composite State of the Economy Index dropped 0.06% month-on-month in seasonally-adjusted terms in August, following July’s 0.02% decline, amid elevated new Covid-19 cases and the reimposition of some restrictions on activity.
September 15, 2020
The Purchasing Managers’ Index (PMI), produced by Bank Hapoalim and the Israeli Purchasing & Logistics Managers Association (IPLMA), increased from 49.8 in July to 53.1 in August, moving above the neutral 50-mark and signaling improving operating conditions for the first time since January.
September 15, 2020
Consumer prices were unchanged over the previous month in August, coming in below July's 0.20% increase.
September 13, 2020
Merchandise exports shrank 8.3% over the same month last year in August, on the heels of July’s 13.7% plunge, amid still-tepid demand abroad.
August 24, 2020
At its 24 August meeting, the Bank of Israel (BoI) left the policy rate at 0.10%, as expected. The decision was likely driven by a desire to assess the impact of past easing, which has consisted of a 15-basis-point policy cut and less conventional measures such as bond purchases, credit schemes and changes to macroprudential regulations.