Current account data for third quarter of 2015

December 15, 2015

Bottom line: Israel’s current account surplus on its balance of payments for the July-September quarter surged to an all-time record (at least in seasonally-adjusted terms) of $3.83bn. The surplus for April-June was revised up by $825mn (!) to $3.43bn — at the time, the second-highest quarterly surplus. The deficit on trade in goods fell to $411mn in the third quarter — by far the lowest since the global financial crisis.

  • The deficit on trade in goods over the last five quarters is: Q3 2014 — $2.4bn.; Q4 2014 — $1.75bn; Q1 2015 — 1.4bn.; Q2 2015 — $1.1bn.; Q3 2015 — $411mn.
  • The key factor at work in this dramatic trend is, of course, the collapse of energy prices over the last 15 months. This has driven a rapid shrinking in the deficit in trade in goods.
  • Meanwhile, the surplus on trade in services has fallen by about 5% in the first nine months of 2015. This mainly reflects the blows suffered by the tourism sector since the war in Gaza last year.
  • However, it should be noted that the rapid growth in service exports, primarily in software and other high-tech sectors, ended in 2013/14.
  • The deficit on ‘primary income’ — the balances of flows paid to foreign workers in Israel and to Israelis working abroad (wages), and between interest and dividends paid on Israeli investments overseas and foreign investments in Israel — was $941mn. in the latest quarter, compared to only $806mn. in the previous one.
  • The $806mn. deficit on primary income in April-June was revised down by over $700mn (!) in the latest data. This comprised the lion’s share of the upward revision of the Q2 data
  • In the financial account, foreign direct investment (FDI) fell to $2.3bn in Q3, down from $3.26bn in Q2 and $4.7bn in Q1. For the first nine months of 2015, FDI totalled $10.3bn. one of the highest levels in the last decade.
  • Foreign portfolio investment in Israel, was negative for the third successive quarter, by $867mn.
  • Israeli portfolio investment overseas turned negative in Q3, for the first time since 2011.

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