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COUNTRY INSIGHTS

October’s CPI surprises sharply on the downside
ISRAEL · In Brief · 15 Nov 2021

October’s CPI increased by 0.1% m/m (consensus expected 0.4%), and declined to 2.3% y/y from 2.5% last month. The main surprise came from the “travel abroad” item (3.7% of the basket) which declined by 7.9% contributing -0.3% to October’s print. This is rather surprising considering restrictions ...

The fiscal deficit is expected to undershoot in 2022, supporting low issuance
ISRAEL · Report · 15 Nov 2021

Highlights: The fiscal deficit declines sharply: - In the last 12 months through October the fiscal deficit declined to 5.5% GDP from 11.9% in March. - Tax revenues in January-October 2021 are up 19% in real terms compared to two years ago (pre-Covid). - We expect a fiscal ...

The fiscal deficit is expected to undershoot in 2022, supporting low issuance
ISRAEL · In Brief · 14 Nov 2021

The fiscal deficit declines sharply In the last 12 months through October the fiscal deficit declined to 5.5% GDP from 11.9% in March. Tax revenues in January-October 21 are up 19% in real terms compared to two years ago (pre-Covid). We expect a fiscal deficit this year of 4.7% GDP, below the off...

Fiscal deficit declines sharply
ISRAEL · In Brief · 08 Nov 2021

Positive fiscal numbers in October The fiscal budget in October reflects a fiscal surplus of 4.4bn, compared to a deficit of 20.4bn last year. The cumulative fiscal deficit LTM declined to 5.5% GDP from 7.2% last month and 11.9% in March. Revenues continue to surprise on the upside due to strong ...

The shekel continues to appreciate sharply
ISRAEL · Report · 08 Nov 2021

The CBS business confidence survey points to increasing optimism and accelerating activity ahead. Employment growth surged in the first two weeks of October following the holiday season. Pressure for shekel appreciation continues as the Governor sees less justification for intervention given the ...

The shekel continues to appreciate sharply
ISRAEL · In Brief · 07 Nov 2021

Strong employment growth in October Following the Jewish holiday season, the number of employed increased sharply reaching the pre-Covid level. The employment/population ratio reached 59.8% compared to 60.5% pre-Covid. Wage growth has averaged around 4% annual, with stronger growth concentrated i...

The shekel appreciated sharply last week
ISRAEL · Report · 03 Nov 2021

The pace of shekel appreciation has accelerated, with the shekel up by 1.5% last week (against the basket of currencies), and by 1.7% in October, as BOI intervention declined. Yet, pressure for appreciation is likely to continue on strong fundamentals and FDI. Private consumption growth slowed as...

The shekel appreciated sharply last week, probably due to less FX intervention by the BoI
ISRAEL · In Brief · 31 Oct 2021

The pace of shekel appreciation has accelerated The shekel appreciated by 1.5% last week (against the basket of currencies), and by 1.7% in October, as BOI intervention declined. Yet, Pressure for appreciation is likely to continue on strong fundamentals and FDI. Nevertheless, we maintain our inf...

Cancellation of non-tradeable bonds likely to be positive for the long end of the curve
ISRAEL · Report · 25 Oct 2021

The Finance Committee of the Knesset approved the cancellation of non-tradeable government bonds as of July 2022, paving the way for Knesset approval by November 10, 2021. We view this reform as significant, expected to increase depth and liquidity in the bond market, and possibly supportive of t...

Cancellation of non-tradeable bonds likely to be positive for the long-end of the curve
ISRAEL · In Brief · 24 Oct 2021

Non-tradeable bond issuance is likely to be cancelled in mid-2022.This will require higher tradeable bond issuance (an additional 35bn annual) in order to meet fiscal financing requirements. Demand for this increase in issuance could be less than 35bn as pension funds diversify their assets, in p...

September’s CPI was in line with expectations
ISRAEL · In Brief · 15 Oct 2021

September’s CPI was in line with expectations Inflation in September rose by 0.2% and 2.5% y/y (up from 2.2% in August). Core inflation accelerated to 2.1% y/y from 1.9% last month. The main items which surprised on the upside were processed food prices (up 0.6% and 2.7% y/y) and fruits and veget...

Bond purchases to come to an end on robust BoI outlook
ISRAEL · Report · 12 Oct 2021

Highlights: The BoI sounds increasingly optimistic * The BoI expects growth to reach 7% this year and 5.5% in 2022. The cumulative growth forecast (12.9%) is 1% higher than previous forecast. * Broad unemployment is expected to reach 5.2% in Q422 from a present 7.9%. * Infl...

The fiscal deficit continues to contract rapidly
ISRAEL · In Brief · 11 Oct 2021

The fiscal deficit continued to contract sharply in September, reaching 6.8% GDP (adjusted for the shift in the Jewish holidays) from 8% in August. Tax revenues are up nearly 30% in January-September, due to capital gains taxation on hi-tech exits, real-estate purchase taxation, and strong PC dem...

Government bond purchases by BoI to come to an end on robust outlook
ISRAEL · In Brief · 10 Oct 2021

The BoI sounds increasingly optimistic BoI expects growth to reach 7% this year and 5.5% in 2022. The cumulative growth forecast (12.9%) is 1% higher than previous forecast. Broad unemployment is expected to reach 5.2% in Q422 from present 7.9%. Inflation to reach 2.5% in 2021 and 1.6% in 2022. T...

Governor Yaron sounded very optimistic today, sees possibility of higher rates one year from now
ISRAEL · In Brief · 07 Oct 2021

Very optimistic tone from the BoIThe rate hold decision came as no surprise but the general tone was very optimistic with much stronger GPD growth forecasted this year (7% instead of 5.5% previous forecast) and remaining robust in 2022 (5.5%). Yaron sees the possibility of a rate hike one year fr...

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