Trade data points to recovery, core trade deficit continues to shrink

ISRAEL - In Brief 13 Mar 2024 by Jonathan Katz

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In February, there was a rapid increase in both industrial exports and imports (seasonally adjusted). Industrial exports increased by 9.5 percent (compared with January), mainly pharmaceuticals, electronic components, and defense exports. Exports rose 7.1% in Dec-February, following a similar decline in the preceding three months. In February, imports of consumer goods increased by 7.6 percent, imports of raw materials increased by 5.9 percent, and imports of investment goods increased by 4.4 percent (mainly vehicles). A faster increase in exports relative to imports led to a decline in the core trade deficit to $1.1 billion, about half the deficit a year ago. This trade data is encouraging and indicates a recovery in domestic activity (both in private consumption, which explains the high level of tax revenues, and in industrial production), as well as expansion in exports after several months of weakness at the beginning of the war. After a sharp improvement in the goods/services account surplus in the fourth quarter, further improvement is apparent in January–February, with a further decline in the trade deficit. This trend is shekel supportive.