No additional accommodation expected today
ISRAEL
- In Brief
29 Nov 2020
by Jonathan Katz
Highlights:Economic indicators continue to point to a gradual recovery Hi-tech service exports increased by 1.7% m/m in September and by 20.8% y/y, an important economic driver of the economy. Credit card purchases increased by 8.6% last week and by 15% in November, due to the opening up of stores. The Google Mobility Index to the workplace continues to expand. Labor productivity in industry is up sharply with IP up 5.7% y/y and hours worked down 2.7%. This trend has enabled exporters to absorb in part the impact of shekel appreciation. This has also kept inflation low. Bond market: The Ministry of Finance will issue 6bn ILS in tradeable bonds in December. This low issuance is due to the holiday season for part of December. The MoF is maintaining its current pace of 3bn ILS issuance per month. We note that December is characterized by strong institutional deposits (before the end of the year), which is supportive of demand for bond as well. The fiscal deficit: From the bond issuance program through December we can derive (roughly) the MoF fiscal deficit forecast of around 11%-11.5% GDP, below the consensus (and BoI) forecast of 13%. Our sources at the MoF support the notion that the fiscal deficit will be better than expected. FX: Last week, the Shekel appreciated by 0.7% against the dollar and by 0.2% against the Euro. The shekel appreciated by 0.6% against the basket of currencies (3.5% YTD). Last week’s appreciation was sharper than in previous months, and could have been impacted by signs of diplomatic relations with Saudi Arabia. Looking ahead into 2021, the BoI will most likely reduce purchases as the economy recovers (assuming an effective vaccine). Covid-19 inf...
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