Robust growth supports monetary tightening in April

ISRAEL - In Brief 16 Feb 2022 by Jonathan Katz
GDP growth in 2021 reached 8.1% (above expectations), with private consumption up 12%, investments expanded by 10%, and exports increased by 14%. This GDP growth is way above initial BoI estimate for 6.5% growth. GDP growth in Q421 reached 16.6%, with private consumption up 19% and exports up 26% (mostly services). These are very robust numbers reflecting strong economic activity towards the end of 2021. The Head of BoI Research also stated today that January’s growth estimate appears strong (at around 4.2% annual) according to a model they have developed. Strong growth, combined with declining slack in the labor market and inflation y/y at the high end of target (and likely to stay there for most of 2020, is all supportive for a rate hike most likely on April 11th, with a second high in Q322.

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