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COUNTRY INSIGHTS

Rate cut today (Monday) appears likely
ISRAEL · In Brief · 25 Feb 2024

A rate cut today is our base forecast: After some hesitation last week, we expect a cut today. Consensus is divided according to Bloomberg (11 expect a rate cut, 6 expect hold). A rate cut is supported by low and decelerating inflation, a strong shekel and only a partial recovery in economic grow...

Despite the deep contraction in the fourth quarter, the economy is recovering
ISRAEL · In Brief · 19 Feb 2024

Despite the deep contraction in the fourth quarter, the economy is recovering GDP data for October–December 23 compared with the previous three months is not really relevant to the current economic environment. The fourth quarter was the deep crisis of the disaster on October 7, a sharp decline i...

Another downside inflation print; a rate cut is on the table
ISRAEL · Report · 16 Feb 2024

1. Inflation in January (0.0% m/m, 2.6% y/y, down from 3.0%) was at the low end of expectations; presently, we give a rate cut at the upcoming meeting a 55% probability. 2. Economic indicators were generally positive last week. 3. The trade deficit declined sharply in January as exports ha...

A rate cut this month cannot be ruled out
ISRAEL · In Brief · 15 Feb 2024

Another low CPI print in January Inflation in January was stable (0.0% m/m) and slowed to 2.6% y/y from 3.0% in December. This index came in at the low end of expectations (0.0%-0.1%). Core inflation (the CPI excluding energy and fresh produce) slowed to 2.4% y/y from 2.7%. Prices of core goods t...

Shrinking trade deficit is shekel positive, at least until imports recover
ISRAEL · In Brief · 13 Feb 2024

Trade deficit declines sharply In January, the trade deficit reached 1.4bn USD compared to 2.0bn in Dec 23, and is down 58% y/y with exports up 5.7% and imports down 20.3% (due to slowing imports of private consumption and raw materials). In the past three months (Nov-Jan), industrial exports hav...

Israel’s rating downgrade with negative outlook surprises markets and reduces the probability of a rate cut in two weeks
ISRAEL · Report · 12 Feb 2024

1. Moody’s decision to place Israel on “negative outlook” (A2) resulted in higher bond yields and a weaker shekel. 2. January’s tax revenues surprised on the upside, resulting in a fiscal surplus. 3. Business sentiment continued to improve gradually in January as the economy recovers.

Israel’s rating downgrade with negative outlook surprises markets
ISRAEL · In Brief · 11 Feb 2024

Moody’s decision surprises markets The downgrade from A1 to A2 was largely expected by markets towards the end of last week. But the combination of a downgrade with a negative outlook was not expected (by the MoF as well). According to Moody’s, the negative outlook was due to the risk of escalati...

Surprisingly strong tax revenues in January point to growth recovery
ISRAEL · In Brief · 08 Feb 2024

January’s fiscal account reflects a surplus of 2.5bn ILS, both due to seasonal factors (low government spending by ministries in the beginning of the year) and to strong revenues of 43.7bn, declining only by 1.5% y/y. Spending for the war reached 6.5bn. The fiscal deficit in the last 12 months in...

Economic activity continues to recover
ISRAEL · In Brief · 06 Feb 2024

The CBS Business Survey for January points further recovery in economic activity. The net balance for current activity improved to +12 points from 7.4 points last month and -1.5 two months ago. Expectations for activity next month remained fairly weak at -1.75 (-2.13 last month) but employment ex...

Despite the Fed's more hawkish message, a February rate cut cannot be ruled out
ISRAEL · Report · 05 Feb 2024

1. Domestic private consumption has recovered rapidly, in part due to the lack of Israelis traveling abroad. 2. The shekel appreciated sharply last week, partly due to optimism regarding a possible ceasefire. 3. A rate cut in February is possible, depending on January’s CPI, the shekel and ...

February rate cut cannot be ruled out
ISRAEL · In Brief · 04 Feb 2024

Private consumption continues to rebound, but slows in January: December witnessed a 12% m/m jump in credit card purchases following 8% increase in November, erasing the 16% contraction in October. Real-time data from the BoI reflect a further 4% increase in January, with a slowdown in the second...

Private consumption rebounds
ISRAEL · In Brief · 31 Jan 2024

Private consumption has recovered quickly. Credit card purchases increased by 12% m/m in December following 8% in November, wiping out the 16% decline in October. This rebound in domestic consumption is due to the cancelling of limitations on activity and lack of Israelis traveling abroad. This p...

With indicators coming in on the positive side, GDP contraction in Q423 likely to be modest
ISRAEL · Report · 29 Jan 2024

Recent economic indicators have been on the positive side: * The BoI Composite Index increased by 0.4% m/m in December, and November’s print was revised higher, to -0.3% from -0.7%. * Real-time daily data point to strong private consumption growth, reaching 4% above pre-war levels...

GDP contraction in Q423 likely to be relatively modest
ISRAEL · In Brief · 28 Jan 2024

Recent economic indicators have been on the positive side: The BoI Composite Index increased by 0.4% m/m in December, and November’s print was revised upwards to -0.3% from -0.7%. Real time daily data point to strong private consumption growth reaching 4% above pre-war levels, in part due to the ...

Economic contraction in Q4 apparently less than expected
ISRAEL · In Brief · 23 Jan 2024

The Composite State of the Economy Index increased by 0.4 percent in December—reflecting the economy’s gradual recovery from the impact of the war. The war continued in December, but its impact on activity continued to weaken. It is interesting to note, that the Composite Index, which is co-incid...

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