The CA surplus remained strong in Q122

ISRAEL - In Brief 14 Jun 2022 by Jonathan Katz
The CA surplus remained strong in Q122 In the 1st quarter of 2022, the current account surplus reached 5.1bn USD, similar to the average quarterly surplus in 2021, but below that of Q421 (6.8bn). This represents a surplus of approximately 4.1% of GDP. The trade deficit increased by 0.2bn in Q122, while the service surplus declined by 0.34bn (all seasonally adjusted data). Net FDI reached 2.5bn in Q122, similar to the pace in 2021 (11bn total for the year). Macro fundamentals continue to support the shekel, although we are likely to see a decline in subsequent quarters, as high-tech exports soften somewhat, while import growth remains strong. Surging outgoing tourism (compared to incoming tourism) and higher commodity prices will provide contributing factors as well. We are likely to see a lower CA surplus of around 3% GDP in coming quarters, and possibly lower one year from now. Nevertheless, in the short run, the shekel is more sensitive to equity market movements abroad, as witnessed by the 2%-shekel depreciation against the basket in the past week.

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