September 16, 2019
Bottom line: April-June 2019 saw one of Israel’s largest-ever quarterly current account surpluses. This was achieved despite falls in the value of trade in both goods (smaller deficit) and services (smaller surplus), from the record levels posted in both of these in the first quarter of 2019. The key to the large surplus was the $600m surplus on primary income – highlighting the trend underway in this area in recent years, from deficit to surplus. I expect this to continue.
September 16, 2019
March 10, 2019
Bottom line: The surplus in Israel’s current account for October-December 2018 jumped to $4.19bn, one of the highest-ever quarterly surpluses. But don’t get carried away by this good news. The rise was overwhelmingly due to a massive $1.14bn surplus on primary income (see definition below) – by far the largest-ever surplus on this component, which usually posts a deficit. It is doubtful if this can be repeated and it may even be revised down in the future. Other than that, the picture was mixed, but the $500m decline in the surplus on trade in services is a negative, especially for the fourth quarter when this surplus usually posts a strong rise.
August 19, 2018
Bottom line: The economy is continuing to grow rapidly, driven by domestic consumption. However, the data for both Q1 and Q2 were massively distorted by sharp swings in vehicle imports — which soared in Q1 but slumped in Q2. More important is the ongoing decline in investment in residential construction and in new plant and equipment, other than vehicles. Export growth was sluggish, while import growth was strong — the external sector continues to be a drag on growth.
May 16, 2018
Bottom line: Déjà vu all over again. The boom in vehicle imports is back, stronger than (almost) ever. That made consumption and investment the twin drivers of growth, while imports surged three times as much as exports, so that the external sector once again dragged growth down instead of contributing to it.
January 25, 2018
Bottom line: November was an(other) excellent month for service exports, which are continuing to achieve rapid rates of expansion across the board, not just in the high-tech sectors. While it is the latter that provide the main thrust, both in the narrow context of service exports and for the overall economy, the strength of the tourist sector — despite the continued rise in the shekels’s value! — is also very significant for the labour market and hence from a socio-political perspective.
January 11, 2018
Bottom line: The deficit on trade in goods for 2017 widened significantly compared to 2016 — which had jumped sharply — after having narrowed in the first half of the year. Once again, the primary driver was higher fuel prices, which alone accounted for 60% of the total year-on-year increase. Vehicle imports, on the other hand, dropped. Overall import growth was low, but still exceeded export growth. Exports were held back by weakness in electronics, although some other sectors scored strong gains.