Coalition stability weakens

ISRAEL - In Brief 06 Apr 2022 by Jonathan Katz

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The stability of the coalition weakens One member of Benet’s party Edit Salman, announced her resignation from the coalition. This will weaken the narrow majority of the coalition (from 61 members to 60), although the “Arab List” could support the coalition without actually joining the coalition. Apparently, she did not notify Bennet of her decision in advance, and it is likely to assume he will try to convince her to change her mind. If she does resign, increasing political instability is likely to support some shekel weakness. The shekel is weakening modestly today. Growth expected to accelerate Business confidence improved in March. The CBS business tendency survey reflects steady improvement in economic activity, especially in the hotel sector. All leading indicator components reflect expectations of rapid increase in orders, both in industry and services (both exports and domestic), as well as expectations for strong growth in retail trade. Inflation expectations NTM are up 2.3% from 2.1% last month and 1.85% in January. Acceleration in economic activity supports monetary tightening. Petrol prices decline Lieberman announced that he will reduce the tax on fuel by 0.5 NIS per liter, which will reduce the price by 6.5% and reduce April’s CPI by 0.2%. April’s cpi is expected to reach 0.6% instead of 0.8%. This is apparently a temporary move, but politically it will be difficult to cancel this reduction. Lieberman’s decision was influenced by a low fiscal deficit in March, with the deficit declining to 1.6% GDP in the last 12 months, down from 2.2% last month. --