In its latest report on Israel, JPMorgan lowered the country’s growth forecasts for 2024 and 2025. The US investment bank expects GDP growth of 0.5% in 2024, down from its previous forecast of 1% and 3.3% in 2025, down from its previous forecast of 1% and 3.3% in 2025. 3.7% in its forecast Previous.
The main reason for the forecast cut is “the recent downward shift in activity data and new downside risks to global growth.” Additionally, the report states, “Israel’s growth data has softened in the past two weeks with downward revisions that make the third quarter look very weak. The Bank of Israel’s economic condition index, which combines information from a small number of growth data-related indicators, has been disappointing.” In particular.”
This latest report comes after several organizations have already lowered growth forecasts for Israel. The Bank of Israel reduced its growth forecast for 2024 to 0.5% last month, and the Ministry of Finance’s latest forecast indicates growth of only 0.4%. Standard & Poor’s expects the Israeli economy to contract this year. However, the Bank of Israel and the Ministry of Finance expect a greater recovery next year.
Not everything is black
Despite JPMorgan’s bleak forecasts, he admits that some of the data may be distorted. The report asserts: “We tend to underestimate the negative signal from these aggregate indicators, as we suspect that they are disproportionately affected by a range of noisy readings, including, for example, construction starts. At the same time, we were encouraged This is a recent increase in foreign trade flows, which may indicate some easing of constraints on the supply side of the economy. These constraints affected the economy and fueled inflation during the war.
JP Morgan also spoke positively about the labor market in Israel. “Labor utilization measures improved in the third quarter, while the labor market conditions index tightened without apparent damage to labor supply in the fourth quarter.”
Impact of the US elections
The survey continued: “In other circumstances, we might be inclined to assume a somewhat stronger rebound in activity at some point in 2025 once security risks moderate. However, with the negative implications of the US elections looming over global growth expectations, we take A more cautious view and keep our 2025 quarterly profile as is, as the carryover from the weaker second half of the year indicates lower growth in 2025, which now stands at 3.3% versus 3.7% previously and with Israel’s exports dominated by services and direct exposure to China small to To some extent, we do not believe that the first-order effect of potentially higher US tariffs should be significant, but the second-order effect through slowing global growth could be meaningful “if President-elect Trump rushes to find a solution to the geopolitical challenges facing Israel, as “As some of his campaign promises indicated, this could entail upside risks to our 2025 growth forecasts.”
Published by Globes, Israel Business News – en.globes.co.il – on November 11, 2024.
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