Aug.08, 2012 | 10:18 AM–
Leading indicators lead to bond rout: The publication of multiple leading indicators showing difficulties in the economy triggered a rout in government bonds on Tuesday. The deficit for the last 12 months surged to 4 percent of GDP, which is well beyond target, and in parallel the people of Israel learned that exports have been contracting. The average wage has been too, shrinking by a hefty 3 percent in two months to NIS 8,816 a month in gross terms. The onslaught of negative indicators spurred the Bank of Israel’s research department to warn that if these trends persist, it will revise its growth forecast for 2012 downwards, from 3.4 percent to something less (its forecast for 2012 is 3.1 percent). While on the Bank of Israel, its 12-month inflation forecast is 2.4 percent and still on topic – the central bank stated clear as day that it doesn’t expect to lower its benchmark rate any further this year, but to leave it at 2.25 percent. That will confound not a few economic analysts, who had been predicting at least one rate cut this year.
Israel tax collection within “norm”: Incidentally, tax collection in Israel amounted to 32 percent of GDP in 2010, while the OECD average is 35 percent, a Bank of Israel representative told a delegation from Standard & Poor’s a couple of weeks ago. It bears saying there’s nothing like a “developed world norm” in this respect. The U.S. ratio is 25 percent but Denmark’s (for instance) is 48 percent, while France’s is 43 percent. Regarding civilian public expenditure, Israel turns out to be mean: 32 percent of GDP. The only developed nation spending less of its GDP on civilian public expenditure is South Korea, the central bank representative told S&P.
Car imports jerk forward: Unfond expectations that VAT will be rising, from 16 to 17 percent, triggered a surge of car imports in July. That month new car imports shot up 22 percent from the corresponding period of the year before to 25,000, according to tax figures. To illustrate the extraordinary nature of the July spike, new car exports this year are down 6 percent from last year as consumer confidence trembles…Read More>>