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Israel faces institutional confrontation as government moves against Attorney General and Shin Bet Chief
ISRAEL · In Brief · 23 Mar 2025

The Israeli government unanimously passed a resolution expressing no confidence in Attorney General Gali Baharav-Miara—a move widely seen as paving the way for her dismissal. In response, Baharav-Miara sent a letter to the cabinet ministers, accusing them of seeking political loyalty rather than ...

Israel’s construction market in Q4: strong recovery but completions remained subdued; financing risks
ISRAEL · In Brief · 20 Mar 2025

Israel’s construction sector and housing prices have long occupied center stage in Israel’s economic discussions. The persistent shortage of Palestinian workers due to the war has caused delays and forced temporary shutdown of several construction sites, contributing to a rise in housing prices a...

Inflation in Israel slows in February below expectations; No imminent rate change expected
ISRAEL · In Brief · 16 Mar 2025

Inflation continues to ease: February CPI reading remains flat and below forecasts The Consumer Price Index (CPI) for February remained unchanged, below our expectations for a 0.2% increase, bringing the annual inflation rate down to 3.4%, from 3.8% in January. Core inflation indicators have also...

Israel’s budget deficit declines further in February; Treasury expected to slow bond issuance
ISRAEL · In Brief · 11 Mar 2025

The Ministry of Finance announced yesterday that Israel recorded a fiscal deficit of NIS 6.1 billion ($1.7 billion) in February. The trailing 12-month deficit fell to 5.3% of GDP, down from 5.8% in January, 6.9% in December, and a peak of 8.5% in September 2024. The decline is primarily attribute...

Israeli geopolitics: stability holds in Lebanon, but Gaza uncertainty and political tensions mount
ISRAEL · Report · 07 Mar 2025

1. Gaza ceasefire in jeopardy – The expiration of the first phase of the Israel-Hamas ceasefire on March 1 has made a return to war increasingly likely, as progress toward a second phase remains stalled. 2. Israel’s stance – Israel supports extending prisoner-hostage exchanges and humanitarian...

Macro risks remain lower than in 2024, but optimism weakens
ISRAEL · Report · 05 Mar 2025

Geopolitical risks in 2025 remain significantly lower compared to 2024. The ceasefire in Lebanon is holding, with the new government demonstrating a strong commitment to its continuation. At this stage, there are no immediate signs of escalation from Syria, and the Iranian axis appears to be weak...

Israel's wage growth slows to 2% in January, easing inflation concerns
ISRAEL · In Brief · 04 Mar 2025

In January 2025, wage growth in Israel slowed to a year-over-year increase of 2.0%, following an increase of 4.5% in December and a modest 0.9% increase in November. This marks a decline compared to the average 5.5% increase in April-October 2024 (see the chart below). We attributed the slowdown ...

Business sector indicators for January signal a return to pre-war levels
ISRAEL · In Brief · 26 Feb 2025

The Bank of Israel's Composite State-of-the-Economy Index increased by 0.6% in January, following an upward revision of December's data to 0.9% (compared to the previous estimate of 0.7%) and a revision of November's data to 0.3%. This rise in the index reflects a 0.9% increase in business sector...

Bank of Israel holds rate at 4.5%, maintains hawkish stance
ISRAEL · In Brief · 24 Feb 2025

The central bank of Israel kept its benchmark interest rate unchanged at 4.5% on February 24th, citing elevated inflation (3.8%) and a tight labor market. While the decision was widely anticipated, the central bank adopted a hawkish stance, emphasizing persistent inflation risks driven by geopoli...

Israel’s GDP growth slows in Q4 2024, labor market remains tight
ISRAEL · In Brief · 18 Feb 2025

The initial estimate for the fourth quarter of 2024 reveals a slowdown in Israel’s GDP growth to 2.5%, down from an upwardly revised 5.3% in the previous quarter, according to initial estimates from the Central Bureau of Statistics. GDP fell sharply in Q4 2023 after the economy almost shut down d...

Israel CPI: Inflation rises to 3.8% in January, VAT hike and tariffs drive index higher
ISRAEL · In Brief · 16 Feb 2025

January CPI overview Israel's Consumer Price Index (CPI) rose by 0.6% in January, slightly above our forecast of 0.5%, bringing annual inflation to 3.8%, up from 3.2% in December. The increase was primarily driven by the higher VAT, taxes on electric vehicles, and rising electricity, water, and m...

Israel’s deficit shrinks to 5.8% of GDP in January as revenues surge; further decline expected in 2025
ISRAEL · In Brief · 10 Feb 2025

Israel’s budget deficit narrows to 5.8% in January 2025 as revenues surge again amid forward payments ahead of planned tax increases The Ministry of Finance announced yesterday that Israel recorded a budget surplus of NIS 23.2 billion ($5.3 billion) in January. The trailing 12-month (TTM) budget ...

Geopolitical risks ease, but economic challenges persist
ISRAEL · Report · 05 Feb 2025

Cautious optimism but macro risks remain high: Israel's geopolitical risk profile has significantly decreased toward the start of 2025. The ceasefire in Lebanon is holding, Iran’s regional influence has weakened following the collapse of the Assad regime, and Israel and Hamas have reached a cease...

Israel's public debt surges to 69% of GDP in 2024. Economic implications and what’s ahead
ISRAEL · In Brief · 23 Jan 2025

Israel's Ministry of Finance reported a sharp rise in the public debt-to-GDP ratio to 69% in 2024, up from 61.3% in 2023 and 60.3% in 2022. Government debt-to-GDP climbed to 67.6%, with total government debt reaching NIS 1,329.3 billion by the end of 2024, compared to NIS 1,127.4 billion in 2023....

Politics: Fragile ceasefires and emerging power realignments in the Middle East
ISRAEL · Report · 22 Jan 2025

This is the first of a series of monthly reports that will focus on Israel’s domestic politics, as well as regional politics as they impact Israel. - Trump’s pressures were key in securing the Israel-Hamas ceasefire in Gaza. Despite its continued hope to annihilate Hamas, Israel is likely to ...

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