In its latest report on Israel, JPMorgan lowered its growth forecast for the country in 2024 and 2025. US investment banks had forecast GDP growth of 0.5% in 2024, down from the previous forecast of 1%, and 3.3% in 2025. The previous forecast was 3.7%.
The main reasons for the downward revision to forecasts are “recent downward revisions to activity statistics and new downside risks to global economic growth.” Additionally, the report notes that “Israel’s growth data has taken a turn in recent weeks, with downward revisions making the third quarter look very weak. It is an aggregation of the.” Related indicators were particularly disappointing. ”
This latest report comes after a number of organizations had already revised downward their growth forecasts for Israel. The Bank of Israel last month lowered its growth forecast for 2024 to 0.5%, while the Treasury Department’s latest forecast puts growth at just 0.4%. S&P expects Israel’s economy to contract this year. However, both the Bank of Israel and the Ministry of Finance expect an even stronger recovery next year.
not everything is black
Despite JPMorgan’s pessimistic forecast, it acknowledged that some of the data could be skewed. “There is a tendency to downplay the negative signals provided by these aggregate indicators,” the report said, “because they may have been disproportionately weighted by a small number of noisy measures, such as building starts, for example. At the same time, we are seeing a recent pick-up in external trade flows, which may indicate some easing of supply-side constraints in the economy. said. These constraints placed a heavy burden on the economy and accelerated inflation during the war.
JP Morgan also spoke positively about the Israeli job market. “Although the labor utilization index improved in the third quarter, the labor market conditions index tightened in the previous quarter with no obvious damage to labor supply.”
Impact of the US election
The study continued: “In other circumstances, it would be tempting to assume that there would be a moderately strong recovery in economic activity at some point in 2025, once security risks have been mitigated. However, given the US election We take a more cautious view and maintain the current quarterly profile for 2025 as the impact looms negative for the global growth outlook, with growth in 2025 continuing from the weaker second half of 2024. Note that this means that the rate will drop to 3.3% compared to 3.7% previously, as Israel’s exports are dominated by services and direct exposure, so the impact on China is much smaller. Although we do not believe the first-order impact of potential U.S. tariff increases will be significant, the second-order impact of a global economic slowdown could be expected if President-elect Trump facilitates resolution of Israel’s geopolitical challenges. This could be significant, as some of his campaign promises hint at.”
Published by Globes, Israel Business News – en.globes.co.il – on November 11, 2024.
© Globes Publisher Itonut (1983) Ltd., Copyright 2024. .
