Consumer spending has come to a crawl and predictions show that the Israeli economy will not hit the 3% growth that was predicted for 2023 despite boosts in the economy through higher consumer spending, a surge in exports and a growing investing market.
Reports show an 8.6% growth in 2021 when Israel was recovering from the COVID-19 pandemic but with inflation at an all time high, it is expected to hit 5.1% by the end of 2022. However, predictions show that inflation should be down to 2.7% by the end of next year, which will put it within the official annual average of 1-3% inflation rate range.
The current inflation should prompt the Bank of Israel to impose rate hikes. Meanwhile, Jonathan Katz, the chief economist at Leader Capital Markets, announced that there has not been any implications of deceleration in Q3 aside for durables such as vehicles.
Latest updates put the annual inflation to be at 5.1% in November.
According to Reuters, the Saudi inflation rate has eased since November and is currently at 2.9%. Aside from that, Asian stocks are sagging and are not strong at all in 2022 due to China COVID resurgence. In other news, the dollar is regaining confidence while oil dips and more rate hikes loom ahead, such as Fed flags. Lastly, the latest statement shows that the Oman central bank is set to raise the repo rate by 50 bps.
In spite of worrying news, the Professor of Shoresh Institution for Socioeconomic Research, Ben-David, warns that recent headlines regarding Israel’s economy are sensationalized, saying that 2022 should not be compared to recent years due to the effects of the pandemic. He goes on to highlight that Israel has done fairly well in recent years with a stable GDP that is growing steadily when measured from 2020 to 2021 which at a sharp increase of 8.1%.
Professor Karnit Flug, the vice president of the Israel Democracy Institute and the former governor of the Bank of Israel, also supported Ben-David’s argument by stating that, “With a growth rate of 8.1% in 2021, Israel’s economy is among the fastest growing advanced economies among OECD countries.”
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