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COUNTRY INSIGHTS

With a ceasefire in place, markets will focus on internal politics
ISRAEL · In Brief · 23 May 2021

Geopolitics: Following 11 days of confrontation, a ceasefire was declared Friday morning which appears to be holding.The actual cost of this operation is not expected to be significant, but it will strengthen the position of the Ministry of Defense and its demand for a significant increase in the...

GDP numbers look better than the headline print
ISRAEL · In Brief · 18 May 2021

The Israeli economy contracted by 6.5% saar in Q121, following growth of 6.3% in the previous quarter. This headline print looks disappointing (we were actually expecting a modest increase in growth), but the devil is in the details: In the beginning of 2021, taxes on new vehicles (hybrid) increa...

April’s CPI surprises on the downside
ISRAEL · In Brief · 17 May 2021

Headline inflation in April increased by 0.3% m/m (0.8% y/y, up from 0.2% last month). This was below market expectations which were in the 0.4%-0.5% range (m/m). Core inflation (the CPI excluding energy items and fresh produce) accelerated slightly to 0.45% y/y from 0.21% last month. The major i...

BoI tapers bond purchases, but FX intervention remains strong
ISRAEL · Report · 10 May 2021

Unofficial bond tapering by the BoI is apparent, while FX intervention increased sharply in April. Economic indicators remain robust, especially business sector surveys and consumer confidence. The cumulative fiscal deficit in the last 12 months to April declined to 11.2% on strong tax revenues d...

BoI tapers bond purchases, but FX intervention remains strong
ISRAEL · In Brief · 09 May 2021

Economic indicators continue to point to a strong recovery The Poalim Consumer Confidence Index returned to pre-Covid levels. Disposable income increased by 2.1% y/y in February. The CBS Business Survey points to expansion in most sectors. In this business sector survey, inflation expectations in...

Bond purchases taper, while FX intervention accelerates
ISRAEL · In Brief · 06 May 2021

Government bond purchase tapering is gradually taking place. In April, the BoI purchased 3.4bn ILS following 4.1bn in March and 4.4bn in February. The Governor hinted at this trend recently, justified in his view, by the rapid recovery of the economy. 62.3bn have been purchased out of the present...

Lower bond issuance likely to offset tapering
ISRAEL · Report · 03 May 2021

Private consumption indicators point to a strong rebound in February-March. This is likely to support strong tax revenues and a positive fiscal print for April. In addition, we see strong consumer demand fueling inflation in the short run, partially offset by a strong shekel. Government bond issu...

Lower bond issuance likely to offset tapering
ISRAEL · In Brief · 02 May 2021

Highlights: Economic indicators continue to point to a strong recovery Exports of hi-tech services (10% GDP) increased by 29% in January-February compared to Q420 (annualized). Private consumption rebounded sharply in Q121 with both chain store sales and credit card purchases expanding sharply. T...

Economic recovery will support tapering of asset purchases
ISRAEL · Report · 26 Apr 2021

* Rates remained stable last week, but the policy statement and macro forecast point to a strong recovery. * The forward guidance statement no longer includes the possibility of “additional tools” or the possibility of zero rates (in the macro forecast). * Asset purchase tapering will de...

Economic recovery will support tapering of asset purchases
ISRAEL · In Brief · 25 Apr 2021

Highlights:Economic indicators continue to point to recovery In Q121 merchandise imports increased sharply, including consumer goods, raw materials and investment goods. This provides a good co-incident indicator as well as a leading indicator of economic growth. Industrial exports contracted in ...

Pent-up demand impacts inflation, while rental prices moderate
ISRAEL · Report · 19 Apr 2021

*Inflation surprised slightly on the upside due to the impact from pent-up demand as the economy opened up. *On the other hand, housing rental prices moderated, supporting a moderation in core inflation to 0.2% y/y from 0.3% last month. *We are forecasting inflation of 0.9% in the next 12...

Pent-up demand impacts inflation, while rental prices moderate
ISRAEL · In Brief · 18 Apr 2021

Highlights of the weekly macro review: Inflation in March surprises slightly on the upside The CPI in March reached 0.6% m/m and 0.2% y/y. We (and the market) had expected 0.5% m/m. Pent-up demand was felt on domestic vacation prices (9.7% m/m) and cultural events and parties (3.7%). This was off...

​Despite slight inflation surprise, core inflation moderates
ISRAEL · In Brief · 14 Apr 2021

Inflation in March was up 0.6% m/m and 0.2% y/y (from zero last month), slightly higher than market expectation (and ours) of 0.5% m/m. A closer look at the details actually points to a moderation of underlying inflation, with core inflation (the CPI excluding energy and fresh produce) declining ...

Signs of FX intervention tapering support shekel appreciation
ISRAEL · Report · 12 Apr 2021

* Pressure for shekel appreciation is mounting as the economy recovers rapidly (hi-tech services and IPOs are surging) and the BoI reduces FX intervention. * Business sector confidence improved sharply in March, with orders increasing in industry and services. * We expect March CPI to re...

Signs of FX intervention tapering supports shekel appreciation
ISRAEL · In Brief · 11 Apr 2021

Economic recovery supports less monetary accommodation In March, the BoI reduced FX purchases to 2bn USD from 4.9bn in February, allowing shekel appreciation against the basket of 1%. So far in April, the shekel has appreciated by an additional 1%. Mass vaccination and opening up of the economy s...

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