Growth is expected to decelerate, political uncertainty elevates higher

ISRAEL - In Brief 27 Mar 2023 by Jonathan Katz

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Several indicators are pointing to slowing growth ahead In January, high-tech service exports declined by 3.4% compared to Q422. In December-February industrial exports contracted by 11% saar. Imports of raw materials declined by 22%, consumer goods by 4% and machinery and equipment by 16% (all saar, last three months trend data). Declining imports usually indicate slower manufacture and construction ahead. Revenues from the various sectors declined by 1.1% saar in Nov-Jan. Manufacturing contracted by 5.7% especially in the high-tech manufacturing. á Residential starts were down 12% q/q in Q4 following a decline of 9% in Q3. Coincident indicators still point to steady growth Unemployment declined to 3.9% in February from 4.3% with the employment ratio (employment/population) actually improving to 61.4% from 61.2%. Credit card purchases increased by 1.7% m/m in February and 1.3% in January. The BoI Composite Index of the economy increased by 0.43% m/m February and is up 2.2% saar in the last three months. Politics: Netanyahu announced last Thursday that the legislation regarding the change in the judicial committee which appoints Supreme Court judges will proceed next week as planned. This proposal will enable the coalition to appoint the head of the Supreme Court and replace two judges (out of 15), while the next appointments will require one judicial member (or one opposition representative) to agree with the six coalition members on the committee. Netanyahu stated that he will be involved in passing this legislation, now that he can no longer be declared “unfit” due to his indictment. Last week, a law was passed preventing the capability of removing the PM except in ...