Higher bond issuance underlines some fiscal slippage

ISRAEL - Report 01 Jul 2019 by Jonathan Katz

Economic growth appears to have slowed in 2Q2019.
* The BOI composite index slowed to 0.1% y/y in May.
* Employment growth has stalled in April-May.
* Unemployment remains low (3.2% ages 25-64) on lower labor participation.
* Chain store sales increased by 0.6% saar in March-May.
* Credit card purchase slowed to 5.5% saar in March-May slowing from 7.6% in the Dec-Feb.

PC demand remains steady but moderate, not expected to create any significant inflationary pressure.
* Hi-tech service exports in January-April are up 6.7% y/y.

The MoF increased bond issuance sharply in July, an indicator of some fiscal slippage.
* BoI Governor urged the government to raise taxes. Otherwise, he expects the deficit to reach 4.5% GDP.
* On a more positive note, in a vote of confidence, the Israeli government issued privately a 50 year 500ml EU debt at 2% to a European pension fund.

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