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COUNTRY INSIGHTS

The BoI signals that fiscal policy is an increasing concern
ISRAEL · In Brief · 10 Dec 2023

Geopolitics: Israel is continuing its ground offensive into the more southern part of Gaza, while missiles into Israel continue but have declined sharply. Sporadic low-level hostilities continue in the North. Domestically, most limitations on activity in Israel have been lifted, except for sports...

The business sector remains pessimistic, but slightly less
ISRAEL · In Brief · 07 Dec 2023

The CBS Business Survey for November continues to point to contraction in activity with a net balance of -1.5 (-1.9 in Oct) for the present activity component (compared to +23 in Sept). The expectations for next month are still net negative (-11.75) but less than in Oct (-23), similar to the empl...

Sharp decline in travel abroad + consumer confidence rebounds
ISRAEL · In Brief · 07 Dec 2023

Sharp decline in travel abroad In November, 167,000 Israelis went abroad, a decrease of 77% compared to November last year. Due to such a sharp decline in the number of passengers and in the number of flights, it is reasonable to assume that the Central Bureau of Statistics will decide not to mea...

A dent in fiscal credibility could postpone easing
ISRAEL · Report · 04 Dec 2023

1. The coalition is finding it difficult to reduce civilian expenditure (coalition agreements, especially), as it approved additional spending for the war. 2. A dent in fiscal credibility in 2024 could result in a weaker shekel and postpone monetary easing. 3. Private consumption declined s...

A dent in fiscal credibility could postpone loosening
ISRAEL · In Brief · 03 Dec 2023

Geopolitics: Following the return 116 hostages, negotiations broke down in receiving the remaining 136 hostages. Israel renewed its offensive and Hamas fired missiles into Israel. Hezbollah fired as well and Israel retaliated. It is not clear whether this renewed pressure will result in the resum...

Rates on hold with a loosening bias
ISRAEL · In Brief · 27 Nov 2023

Rates on hold with a loosening bias Policy rates remained unchanged today at a level of 4.75%. Inflation has moderated but remains slightly above target, and the economy is recovering in some components of activity. During the press conference, Governor Yaron stressed that monetary loosening will...

Rate stability expected today, with an easing bias
ISRAEL · Report · 27 Nov 2023

1. A rate-hold decision today is likely, with a strong easing bias. This could entail an unscheduled revised macro forecast for 2024, including a lower policy rate forecast. 2. “Broad” unemployment spiked to 10.4% in October; one quarter of all those usually employed were absent from work for ...

Rate stability expected today (Monday) with a loosening bias
ISRAEL · In Brief · 26 Nov 2023

Geopolitics: Israel’s operation in Gaza has been put on hold for several days in exchange for the return of hostages. The ceasefire is expected to be temporary although the hostage release priority could delay the renewal of the military operation for longer than initially expected. Low level hos...

The shekel continues to appreciate sharply
ISRAEL · Report · 20 Nov 2023

1. The shekel continued to appreciate sharply last week, fueling expectations for a possible rate cut next week. 2. Inflation moderated in October, especially housing rental prices and services, a trend that is likely to continue. 3. Real-time data point to an increase in private consumptio...

The shekel continues to appreciate sharply
ISRAEL · In Brief · 19 Nov 2023

Geopolitics: Israel’s ground operation into Gaza continues, as do sporadic missile fire into Israel from Gaza, but at a much slower pace. The Israeli army is consolidating its control on northern Gaza and is proceeded slowly to deal with the massive tunnel network. Sporadic low-level fighting wit...

Inflation in October points to deceleration
ISRAEL · In Brief · 15 Nov 2023

Inflation in October points to deceleration Inflation in October (0.5% m/m, 3.7% y/y following 3.8% in September) came in as expected. The underlying trends point to deceleration with housing rental prices (OER) decelerating to 4.9% y/y from 5.5%, while the main housing item moderated to 4.8% y/y...

Business sentiment falls sharply as hostilities persist
ISRAEL · Report · 13 Nov 2023

1. The October Business Sentiment Survey reflects an expected sharp decline in economic activity. 2. The fiscal deficit is expected to reach 4% GDP in 2023 and 6% GDP in 2024 as a result of the conflict. 3. We expect a CPI print of 0.5% m/m in October, impacted by seasonality and higher fre...

Business sentiment falls sharply as hostilities persist
ISRAEL · In Brief · 12 Nov 2023

Geopolitics: Israel’s ground operation into Gaza continues, as do sporadic missile fire into Israel from Gaza, although at a decreasing pace. The Israeli army is consolidating its control on northern Gaza and is proceeded slowly to deal with the massive tunnel network especially in Gaza city (inc...

Both business expectations and consumer confidence decline sharply
ISRAEL · In Brief · 09 Nov 2023

October’s Business Sentiment Survey points to a sharp deterioration in expectations for growth next month (November), with this component declining to -23 points from +0.4 in September. The employment expectation component also turned net negative to -14.65 from 1.16. The construction sector is e...

The fiscal deficit expands rapidly
ISRAEL · In Brief · 08 Nov 2023

The fiscal deficit expanded rapidly to 2.6% GDP in the last 12 months through October from 1.5% one month ago. The actual deficit in October reached 22.9bn ILS compare to 3.1bn in Oct 22. Expenditure of ministries expanded by 12.3% y/y, mostly due to higher defense spending. Tax revenues declined...

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