Israel Country Risk Report Q2 2020


Attention: There is an updated edition available for this report.

Israel Country Risk Report Q2 2020

The Israeli economy remains relatively strong despite being affected by the slowdown in global economic growth. 2020 will see economic growth rise, reversing a three-year trend of declines.

The acceleration will mainly be driven by rising gas production, although the underlying economy will still suffer from a cyclical downturn. Flagging business confidence and slower private consumption suggests this is already playing out.

Similarly, the current account surplus will grow in the short term thanks to gas exports and a demand-driven reduction in imports.

We expect the Bank of Israel (BoI) to cut its key policy rate by 15 basis points in the first half of the year to stem the appreciation of the shekel and push near-zero inflation closer to its 1.0-3.0% target range.

The ILS will nevertheless continue to strengthen in 2020 but at a slower rate thanks to a slight recovery in global market sentiment and the BoI's impending rate cut.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Net Exports To Boost Israel Growth, But Domestic Demand Softening
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Israel Moving Toward Larger Current Account Surpluses
Outlook On External Position
TABLE: BREAKDOWN OF IMPORTS IN 2018
TABLE: BREAKDOWN OF EXPORTS IN 2018
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Bank Of Israel Rate Cut Likely In 2020
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: BREAKDOWN OF PUBLIC REVENUES & EXPENDITURE, % OF TOTAL
Currency Forecast
ILS: Appreciation Easing As Global Markets Relax
TABLE: FITCH SOLUTIONS CURRENCY FORECAST
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Israel Country Risk Q2 2020Contents10-Year Forecast
The Israeli Economy To 2029
Robust Growth Prospects As Investment Picks Up
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Israel's March Elections Unlikely To Break Gridlock Unless Netanyahu Leaves
Long-Term Political Outlook
Rising Internal Polarisation; External Security Risks Here To Stay
Operational Risk
TABLE: OPERATIONAL RISK
Conflict Risk
TABLE: MAIN ACTIVE TERRORIST GROUPS
TABLE: POLITICAL VIOLENCE RISK
TABLE: MAJOR INTERSTATE CONFLICT FLASHPOINTS
TABLE: MILITARY PROFILE AND DEFENCE AGREEMENTS
TABLE: BUSINESS RESPONSE TO CONFLICT RISK
Transport Network
TABLE: ROAD RISKS
TABLE: RAIL RISKS
TABLE: PORTS AND INLAND WATERWAY RISKS
TABLE: AIR TRANSPORT RISKS
Global Macro Outlook
Growth Stabilising, With EMs Set To Accelerate In 2020
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: ISRAEL – MACROECONOMIC DATA AND FORECASTS

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