Exports stabilizing at a low level but trade deficit up on import growth

ISRAEL - In Brief 13 Sep 2016 by Jonathan Katz
In June-August, industrial exports increased 3.6% SAAR (trend data) following a contraction of 8.5% the previous three months. Imports of raw materials increased 5.3% following an increase of 5.6% the previous there months. Imports of consumer goods are down 10.9% (due to a sharp decline in new vehicle imports) following an increase of 2.8%. Imports of machinery and equipment is up 72% saar in June-August following growth of 69% on the back of the construction of the new Intel plant. The improvement in export performance is due mostly to pharmaceuticals. The increase of raw material imports is a good leading indicator for future IP. Softer consumer imports could suggest a slowing down of PC growth, following 9.5% saar in Q216. The trade deficit is up by 0.5bn USD in June-August (compared to the previous three months) and up 3.7bn USD y-o-y since the beginning of the year. A larger trade deficit supports a smaller CA surplus, which means weaker pressure for ILS appreciation, although net FDI is the major factor supporting the shekel and remains robust.

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