TPFG forecast: high inflation, continued rise in interest rates and decline in growth
The report of the chief economist at the Ministry of Finance does not herald optimism for the new year. In real estate, a slowdown is observed alongside an increase in rent and a large wave of immigrants from Eastern Europe
Ranit Nahum-Halevi
03/10/2022
Monday, 03 October 2022, 12:50 Updated: 13:04
Share on Facebook
Share on WhatsApp
Share on Twitter
Share by email
Share in general
Comments
Comments
Not an encouraging forecast (Photo: ShutterStock, Slava Dumchev)
The growth forecast for 2018 is not encouraging. The report of the Chief Economist at the Treasury, published today, indicates that in 2023 the average growth forecast is expected to decrease to a rate of 3.1%, compared to a growth rate of 5.5% recorded in 2022.
The main part of the financial war will be waged by the banks in the face of inflation, and therefore it is expected that the interest rate will continue to rise in 2023 as well.
Several factors support the lowering of the growth forecast for 2023 and a downward revision of the forecasts for 2022, chief among them the worsening of economic conditions, mainly the increase in interest rates and high inflation rates.
According to experts, this may have a significant negative impact on two key sectors: the high-tech sector, which is affected by declines in the capital market, as well as the real estate sector - which is affected by an increase in raw materials, a shortage of workers, high energy prices and disruptions in the supply chain.
The report's experts also predict that all of this may result in a significant increase in rent. Another concern that emerges from the report concerns the war taking place between Russia and Ukraine, and the risk of the war spreading to other regions - which may bring a larger than expected wave of immigrants into the country - and also lead to an elite rental prices.
Wars, plagues and more
The war may have additional effects, negative and positive, on the Israeli economy.
Damage to growth, on the one hand, due to the decrease in trade volumes with Russia and Ukraine and its effect on the inflation environment and energy prices.
On the other hand, the ongoing war is also expected to increase Israel's defense exports and the export of goods that are a substitute for products exported by Russia, mainly minerals.
Another concern that appears in the report concerns the warming of relations between Zion and Taiwan, which may affect the global economy, including Israel. The experts' assessments on this issue ranged from extremely significant consequences for Israel to only minor effects. Additional risks mentioned in the report concern a possible worsening of the epidemic The corona virus, the deterioration of the security situation in Israel and extreme climate events.
As for the factors of inflation in Israel, the experts of the forum believe that it is supported by the increase in the price of imports, a significant increase in wages and rent as mentioned, as well as high transportation costs due to the increase in energy prices.
With regard to the labor market, the expectation as shown in the report is that the participation rate will increase slightly, and this against the background of the slowdown in global growth, interest rate increases and the slowdown in the high-tech market.
What happens to the shekel?
In the second quarter of 2022, the shekel continued to lose its value against the leading currencies, but starting in July, the trend reversed and the shekel depreciated, mainly due to the impact of the stock markets.
The experts all believe that in the near term, the shekel exchange rate will be affected by the situation in the capital markets, while in the long term the basic factors support the appreciation of the shekel.
good to know (in advance)
Beat the pain: B-Cure laser in an unprecedented experience sale
Served on behalf of B Cure Laser
Real estate
Tags
Real estate I
Bank of Israel
interest