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COUNTRY INSIGHTS

Tapering in FX intervention appears to be already here
ISRAEL · In Brief · 08 Apr 2021

Tapering in the FX market appears to be already occurring. In March, the BoI purchased 2.0bn USD, following 4.9bn in February and 6.8bn in January. The shekel appreciated by 1% in March (against the basket), and has appreciated by 0.5% in the first week of April. Although the BoI has purchased 13...

The economic rebounds as restrictions are lifted
ISRAEL · In Brief · 29 Mar 2021

Weekly Macro Wrap Up 29.3.21 Recent economic data remains rather positive and reflects the rapid opening up of the economy on the back of mass vaccination. We stress the weekly credit card purchases which increased by 6% in the last week through the 25.3, and has increased by 31% since mid-Februa...

Israel election update: coalition formation looks increasingly complicated
ISRAEL · In Brief · 24 Mar 2021

With 90% of the votes counted, the balance of mandates has shifted dramatically. The Netanyahu led block currently has only 52 mandates. If Benett (Yamina) and his 7 seats join this coalition, Netanyahu will still be short of the necessary 61 majority. Netanyahu must bring in one of the Arab part...

Initial election results positive for Netanyahu
ISRAEL · In Brief · 24 Mar 2021

With over 70% of the votes counted, the right-wing Likud-led block appears to be the winner with 57 seats (out of 120 in the Israeli Parliament). This includes the Likud (32), the ultra-orthodox (19) and the ultra-right Zionist (6) parties. Benett (Yemina) received 7 seats and if he joins this bl...

Inflation accelerates but remains fundamentally low
ISRAEL · Report · 22 Mar 2021

* Private consumption has expanded rapidly with the opening-up of the economy. * Despite February’s higher-than-expected CPI, we see inflation stabilizing at the low end of the target. * Pressure for shekel appreciation is expected to continue while BoI FX intervention is likely to taper...

Inflation accelerates but remains fundamentally low
ISRAEL · In Brief · 21 Mar 2021

Highlights of the Weekly Israel Macro Wrap Up 22.3.21February’s CPI reached 0.3% m/m, above expectations This was due to higher rental prices and an upward correction in clothing prices. Core inflation moved higher to 0.3% y/y from zero last month. The major forecasters on average now expect infl...

​Another CPI surprises on the upside
ISRAEL · In Brief · 15 Mar 2021

Inflation in February reached 0.3% m/m and zero y/y (from -0.4% y/y last month), about 0.2% about market expectations (and our). Core inflation (inflation excluding energy and fresh produce) pushed higher, reaching 0.3% y/y from zero last month. The main inflation surprises came from prices of ho...

Fundamentals will continue to support appreciation
ISRAEL · Report · 15 Mar 2021

* Both consumer confidence and consumption have rebounded sharply since mid-February on rapid vaccination and the opening-up of the economy. * The combination of the CA surplus and net FDI reached a record level of 10% GDP in 2020; macro fundamentals remain shekel positive. * Residential...

Fundamentals will continue to support appreciation
ISRAEL · In Brief · 14 Mar 2021

Strong fundamentals support shekel appreciation In 2020, the CA surplus reached 5% GDP, and net FDI added an additional 4.9%. This is due to Israel’s vibrant hi-tech sector, boosting exports and investments. Some factors will reverse in 21: commodity prices are up (energy esp.), travel abroad wil...

The spike in inflation expectations is less justified in Israel
ISRAEL · Report · 08 Mar 2021

* Private consumption is set to accelerate as the economy has opened up significantly. * The fiscal deficit reached 12.4% of GDP; we expect a lower deficit of 8.5% by year-end. * Inflation expectations (as reflected in the bond market) have moved higher, but we think the inflation enviro...

The spike in inflation expectations is less justified in Israel
ISRAEL · In Brief · 07 Mar 2021

Inflation expectations have increased in Israel (and globally) Yet, Israel has had a very low inflationary environment in recent years. The structural current account surplus will continue to support appreciation. In addition, Israel’s hi-tech service sector will continue to attract inflows. Assu...

Hi-tech services continue to support growth
ISRAEL · Report · 01 Mar 2021

* Hi-tech service exports expanded rapidly in Q420, supporting shekel appreciation. * Rapid growth of employment in the hi-tech sector (high income) is expected to support higher rental prices. * The economy is opening up rapidly, supporting economic growth and lower unemployment. * ...

Hi tech service exports continue to support growth (and the shekel)
ISRAEL · In Brief · 28 Feb 2021

Highlights of the weekly macro wrap up: The BoI sounds more optimistic Rates and accommodation remained unchanged last week. Nevertheless, the rate announcement sounded more upbeat, in light of rapid vaccinations and opening up of the economy “The fast pace of the inoculation process in Israel in...

Labor productivity surges in 2020
ISRAEL · Report · 22 Feb 2021

GDP numbers surprised on the upside in 2020, and labor productivity surged by 6.8%. Despite recent weak economic indicators, rapid vaccination and the opening of the economy will support strong household demand. Inflation surprised on the upside as prices of housing (rental) and durable goods mov...

GDP surprises on the upside, labor productivity surges in 2020
ISRAEL · In Brief · 21 Feb 2021

GDP contracted by 2.4% in 2020 GDP per capita contracted by 4.1%, relatively modest in light of extended periods of closures. Israel enjoyed two drivers: Hi-tech service exports (software, etc.) expanded by 18% in 2020, and a strong net negative tourist account. Lack of flights abroad supported d...

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