Country Analysts

Jonathan Katz
Former Chief Economist, Finance Ministry Budget Department

Recent Country Insights

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Underlying growth remains steady in Q2
ISRAEL - Report 19 Aug 2019
Headline Q2 2019 GDP growth reached 1.0% saar following 4.7% in Q1 2019. * Growth excluding import taxes reached 3.1%, following 3.2% in Q1 2019. This is more reflective of real activity, due to the higher taxes on new vehicles on April 1. * Exports (excluding diamonds and start-ups...

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BoI company survey pointing to modest growth in Q3
ISRAEL - Report 12 Aug 2019
The BoI Company Survey for Q2 2019 is pointing to modest growth. * The net total balance is only +5, below that in 2018 (+12.8). * Industry and retail trade are reporting contraction in activity, while services, construction and hotels are reporting expansion. * Manufacturing...

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BoI Governor backtracks on his hawkish bias
ISRAEL - Report 05 Aug 2019
Unemployment remains low and the labor market tight. * Unemployment in Q2 2019 reached 3.9% from 4.0% in Q1 2019. * Unemployment in the 25-64 age group reached 3.3% in Q2 2019. * Job growth slowed in Q2 2019, and labor participation declined. * The labor market remains t...

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Shekel appreciation will support lower inflation and stable rates
ISRAEL - Report 29 Jul 2019
Highlights: The shekel appreciated by 0.8% last week (against the basket). * We think the shekel has strengthened in part due to the divergence of monetary policies, with the BoI still projecting a tightening bias while most other central banks are reducing rates. * The shekel ha...

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Sharp decline in inflation will prevent tightening this year
ISRAEL - Report 22 Jul 2019
Highlights: June's CPI (-0.6% m/m, 0.8% y/y) came in way below expectations. * Both fresh produce and rental prices surprised on the downside. * Nevertheless, core inflation remained stable at 1.1% y/y. We expect inflation to reach 1.0% in 2019 and 1.1% NTM. * This foreca...

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Surprisingly hawkish message from the BoI
ISRAEL - Report 15 Jul 2019
Highlights: Policy rates remained on hold last week. * The BoI Governor's press conference and the macro forecast reflected a clear tightening bias. Governor Yaron sees the likelihood of a rate hike in "one of the upcoming decisions". He also said that Israel could tighten while other b...

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Markets will react today to the BoI rate forecast
ISRAEL - Report 08 Jul 2019
The fiscal deficit (LTM) moved higher in June to 3.9% GDP. The fiscal deficit is increasing and is likely to breach 4% GDP this year. Wage growth has moderated recently, up 3.0% y/y in April from 3.8% in March. Israeli saving institutions reduced their FX exposure in May to 16.5% from 17.2% in Ap...

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Higher bond issuance underlines some fiscal slippage
ISRAEL - Report 01 Jul 2019
Economic growth appears to have slowed in 2Q2019. * The BOI composite index slowed to 0.1% y/y in May. * Employment growth has stalled in April-May. * Unemployment remains low (3.2% ages 25-64) on lower labor participation. * Chain store sales increased by 0.6% saar in March-M...

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Macro fundamentals remain shekel supportive
ISRAEL - Report 24 Jun 2019
Highlights: Residential completions increased sharply (18% q/q) in Q1 2019. - This is supportive of softer rental prices as inventory increases. - Housing starts declined in Q1 2019 but an upward revision is likely. Job vacancies have declined in recent months. - This is mo...

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