In its latest report on Israel, JP Morgan lowered its growth forecasts for the country for 2024 and 2025. The US investment bank forecasts GDP growth of 0.5% in 2024, down from its previous forecast of 1% and 3.3% in 2025, down from 2025. 3.7% in its previous forecast.
The main reason for the lower forecast is « the recent decline in activity data and new downside risks to global growth. » Additionally, the report mentions that « Israel’s growth data has seen a decline over the past two weeks, with downward revisions now making the third quarter appear very weak. » The BoI’s State of the Economy Index, which brings together information from a few growth indicators, relative to the indicators, was particularly disappointing. »
This latest report comes after many organizations have already cut Israel’s growth forecasts. The Bank of Israel lowered its 2024 growth forecast to 0.5% last month, and the Finance Ministry’s most recent forecast calls for growth of just 0.4%. S&P predicts a slowdown in the Israeli economy this year. However, the Bank of Israel and the Finance Ministry predict a larger recovery next year.
It’s not all black
Despite JP Morgan’s gloomy forecasts, it acknowledges that some data could be distorted. The report points out: “We tend to downplay the negative signal emitted by these overall indicators, because we suspect that they have been weighed down disproportionately by a handful of noisy numbers, including, for example, housing starts. encouraged by a recent recovery in external trade flows, which could indicate some easing of supply-side constraints in the economy. These constraints weighed on the economy and fueled inflation during the war.
JP Morgan also spoke positively about the Israeli labor market. “Labor utilization indicators improved in the third quarter, while the labor market conditions index tightened without labor supply being affected by last quarter. »
Impact of the US elections
The survey continues: “In other circumstances, we would be tempted to assume a somewhat stronger rebound in activity at some point in 2025, once security risks have eased. Yet, with the negative implications of the US elections for the global growth outlook, we are taking a more cautious view and keeping our quarterly profile for 2025 as is. A carryover of a weaker second half implies lower growth for 2025, which now stands at 3.3% compared to 3.7% previously. that, with Israel’s exports dominated by services and direct exposure to China quite low, we do not believe that the first-order impact of a possible increase in US tariffs should be significant, but that A second-order impact via a slowdown in global growth could be significant. “As President-elect Trump accelerates the resolution of Israel’s geopolitical challenges, as some of his campaign promises suggested, this could imply upside risks to our growth projections for 2025.”
Published by Globes, Israel Business News – fr.globes.co.il – November 11, 2024.
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