Israel Deficit Expected to Drop to 4.0%-4.2% of GDP, Says Leader Capital
Leader Capital Markets analysts report a gradual business recovery in Israel and project a deficit below target at 4.0%-4.2% of GDP, alongside global market updates.
Leader Capital Markets analysts have released their weekly economic review, highlighting the gradual recovery of Israeli businesses, a lower deficit forecast, and developments in the US bond and inflation markets.
The business sector trend survey indicates a continued gradual recovery alongside a moderate inflation environment. Budget data reinforces the assessment that this year's deficit will be lower than the official target, heading toward 4.0%-4.2% of GDP.
Regarding the US economy, analysts noted that August inflation data supports a Federal Reserve rate hike. Special importance is attached to the Fed's future rate projections, known as the dot plot. Disappointment with the buyback program supported rising US yields, while Israel's August CPI is expected to rise by 0.8% to 0.9%, mainly due to seasonal factors.
Concluding their analysis of the local bond market, experts stated that despite low inflation and a controlled deficit, long-term bonds will likely be influenced by domestic political uncertainty and rising global yields. Inflation pricing in the bond market still favors CPI-linked channels, particularly amid concerns over rising global commodity prices.
