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COUNTRY INSIGHTS

Sharp shekel appreciation likely to prevent a further rate hike
ISRAEL · Report · 12 Jun 2023

1. This fiscal deficit will likely reach 1.8%-2% GDP this year, and 2024 will be more challenging. 2. Economic activity remains fairly robust, according to the latest business survey. 3. The recent sharp shekel appreciation will moderate inflation and reduces the chances of further tighteni...

Sharp shekel appreciation likely to prevent further rate hike
ISRAEL · In Brief · 11 Jun 2023

Fiscal data continues to support credibility in 2023, 2024 could be more problematic The fiscal deficit is gradually increasing as tax revenues decline, but the pace appears modest. The fiscal deficit reached 0.6% GDP in the last 12 months, up from 0.3% last month. Tax revenues are down 7.8% y/y ...

Private consumption decelerates despite wage acceleration
ISRAEL · Report · 05 Jun 2023

1. Wage growth remains sticky, accelerating at an annual rate of 5%. 2. Private consumption growth has decelerated in recent months. 3. The shekel continued to weaken due to uncertainty regarding both the political and geopolitical outlook.

Private consumption decelerates despite wage acceleration
ISRAEL · In Brief · 04 Jun 2023

Wage growth accelerated in Q123 to an annual rate of 6.3% (trend data) from 3.5% in Q422. This wage growth was witnessed in several sectors, both in public sector (wage agreement in the educational sector) but in the private sector as well. Initial data for April point to wage growth of 5.1% y/y,...

Further tightening will be data dependent
ISRAEL · Report · 30 May 2023

1. Last week the shekel weakened sharply on concerns regarding geopolitical risks and the possible renewed unilateral judicial overhaul. 2. A weaker shekel will translate into higher inflation (we see a 15% pass-through). 3. Unless this trend is reversed, the likelihood of a rate hike in J...

Further tightening will be data dependent
ISRAEL · In Brief · 29 May 2023

Rates reach 4.75% with mixed signals Last week’s 0.25% hike was in line with expectations on the back of strong economic activity, a tight labor market and sticky/broad-based inflation above target. Following the rate hike, Governor Yaron was interviewed and conveyed a dovish message stating that...

Rates up 0.25% to 4.75%
ISRAEL · In Brief · 22 May 2023

Policy rates increased today by 0.25% to 4.75%, in line with consensus. Inflation remains high and broad-based, core inflation has accelerated, but the BoI is looking at the annual rate of inflation in the past 6 months and 3 months and notes moderation (3.9% rate for the last three months, and d...

We expect a 0.25% rate hike today
ISRAEL · Report · 22 May 2023

1. We expect a rate hike of 0.25% today, with 4.75% likely to be the terminal rate. 2. Tightening will be supported by higher core inflation, a tight labor market and fairly steady growth (although with growth pessimism). 3. A sharper hike of 0.5% cannot be ruled out, but the MPC will most ...

We expect a rate hike of 0.25% today, but a 0.5% hike cannot be ruled out
ISRAEL · In Brief · 21 May 2023

We expect a rate hike of 0.25% today, but cannot rule out 0.5% Nevertheless, the MPC will most likely also discuss a sharper hike of 0.5% (most likely a minority view). Most macro factors support further tightening: May’s upward inflation surprise, acceleration in core inflation, tight labor mark...

Growth slows on weak PC demand
ISRAEL · In Brief · 16 May 2023

GDP growth slows in Q1 Headline GDP growth slowed to 2.5% saar in the 1st quarter of 2023, following growth of 5.3% in Q422. Private consumption declined by 1.7% mostly due to a shift in new vehicle purchases to Q422 before higher taxation came into effect. Excluding new vehicles, private consump...

April's CPI surprises sharply on the upside as core inflation accelerates
ISRAEL · In Brief · 15 May 2023

April’s CPI surprises sharply on the upside Inflation in April reached 0.8% m/m, double the consensus expectation of 0.4%. The annual rate remained stable at 5.0%, while core inflation (the CPI excluding energy and fresh produce) accelerated to 5.26% m/m from 5.10% last month. Two items surprised...

Government bond issuance expected to increase
ISRAEL · Report · 15 May 2023

1. We expect April CPI to reach 0.4% m/m (in line with consensus), impacted by seasonality and a weaker shekel. 2. GDP growth in Q123 is expected to reach 1.8% saar, fueled by modest private consumption growth, residential investments and service exports. 3. We expect the fiscal deficit to ...

Government bond issuance expected to increase
ISRAEL · In Brief · 14 May 2023

We expect the fiscal deficit to reach 2.4% GDP this year This assumes further contraction in tax revenues in 2H23. According to our fiscal financing projection, bond issuance will gradually increase from 1.35bn per week in May to 2.0-2.25bn. The bond market should be able to absorb this increase,...

The business sector is increasingly pessimistic
ISRAEL · Report · 08 May 2023

1. The Business Tendency Survey reflects growing pessimism in the coming months. 2. Headline GDP growth in Q123 is likely to be weak. 3. Markets will await the S&P rating report regarding Israel’s outlook on Friday; the stable outlook is likely to be maintained.

The business sector is increasingly pessimistic
ISRAEL · In Brief · 07 May 2023

The business sector is increasingly pessimistic The Business Tendency Survey reflects fairly steady growth in April, but the expectations three months ahead declined sharply to reflect basically no growth. The expectations for employment also declined. The high-tech service sector is expecting a ...

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