"The operation in Gaza will mean a substantial and lasting blow to the tourist industry, which represents about 5% of Israel's exports," says Alex Zabezhinsky, chief economist at Meitav Dash Investment House, in his weekly macro review.
"The military operation will affect July's economic figures, and perhaps also August's, and the picture will be even more unclear, making it difficult for the Bank of Israel to make decisions. At present, with the data we have available, the Bank of Israel can be expected to leave its interest rate unchanged," Zabezhinsky writes.
As far as the stock market is concerned, Zabezhinsky writes that "we agree that people should not rush to sell because of a military operation, but at the same time war is not exactly a good reason to buy, and the longer the operation goes on, the greater the risks."
On inflation, Zabezhinsky says that the fighting could considerably upset the normal pattern of the Consumer Price Index, and that in previous protracted campaigns, inflation has generally been lower than the norm for the period. He estimates that the CPI will rise 0.2% in July, while his twelve-month inflation forecast remains at 1%.
Published by Globes [online], Israel business news - www.globes-online.com - on July 21, 2014
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