A 6% increase in credit card purchases over the weekend and a 31% increase since the restrictions were lifted • The level of mobility to workplaces is still 20% lower than the peak • "The economy will grow by 5.35% by the end of the year"
A six percent increase in credit card purchases
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The growth forecast continues to rise, in parallel with the deficit reduction forecast: Yonatan Katz and Lider Capital Markets economists predict that by the end of the year the Israeli economy will grow by 5.3% compared to 2020, and the deficit will fall to around 7%.
The Bank of Israel's weekly indicators point to a rapid recovery of the economy, with a 6% increase in credit card purchases in the past week and a 31% increase since mid-February (with the removal of most restrictions).
The level of mobility to the workplace continues to rise and return to levels between previous closures, although it is still 20% less than in the West, due to the combination of high unemployment and changing habits in favor of working from home.
A leap in high-tech services
In January, exports of high-tech services (software, computing, cyber, etc.) jumped by 9.6 compared to December (seasonally adjusted), and increased by 7% compared to the average of the last quarter of 2020. This important sector grew by 19% in 2020 And constitutes 8.8% of the total product.
Rapid expansion in the export of high-tech services contributed to an improvement in the current account and a appreciation in the shekel, a pressure that is expected to continue.
In addition, acquisitions by high-tech companies have also contributed to the increase in capital gains tax, which explains some of the surprising increase in tax revenues in recent months.
On the other hand, there is a weakness in Israeli industry, as is also evident from the purchasing managers' index, which fell by 0.1 points in February to 49.4 with a weakness in export orders (43.2 points).
The broad unemployment rate fell to 15.4%, but according to Lider, the unemployment data will not moderate significantly until the repeal or amendment of the Comprehensive Law is amended.
We see an increase in inflation
Inflation is expected to rise slightly, with indices for the coming months expected to be relatively high, mainly due to seasonal price increases, but also due to rising fuel prices - due to disruptions in world oil supplies due to the blockade of the Suez Canal.
Although the election results in Israel do not yet herald near stability, in the past week the shekel has remained stable against the currency basket.
Leader expects a rapid recovery that will lead the Bank of Israel to reduce its involvement in the markets, both in the bond market and in the foreign exchange market, albeit gradually.
As for fiscal policy, Leader notes that despite the election results and the assessment that a state budget will not be approved soon, "the systems have learned to cope with this reality, which strengthens the ability of Treasury officials to control fiscal policy with less political intervention."
Leader adds that "as you may recall, since the beginning of the year, tax revenues have been pleasantly surprising, including the capital gains tax. In the second half of the year, the Treasury is expected to announce a reduction in the volume of fundraising."