An OECD indicator predicts a sharp slowdown in the growth rate of the Israeli economy in the next six to nine months. The Composite Leading Indicators are meant to identify turning points in the business cycle using inventory data, confidence surveys, and figures on the main drivers of an economy.
A drop in the indicator denotes below average growth. The February reading, released on Monday, shows a fairly sharp drop of 1.19% compared with February 2015. It was the most negative figure from the 30 countries included in the indicator, after the UK, which recorded a 1.7% drop, and Ireland, which recorded a 1.57% drop.
The figure predicts below average growth for the economy or - in an extreme case - a recession.
Economists in Israel do not place much emphasis on the CLI because it is a general indicator that tracks all OECD countries and is not managed by the team of economists monitoring the Israeli economy.
The latest OECD growth forecast for Israel was published in November and predicted 3.2% growth in 2016 - a significantly higher target than the updated forecasts of the Ministry of Finance and the Bank of Israel, which give growth rates of 2.9% and 2.8%. The next detailed OECD forecast for Israeli is expected by the end of May.
However, the minutes from the meetings of the Bank of Israel’s monetary committee ahead of the interest rate decision for April - released on Monday - reveal a certain slowdown in the first quarter of 2016 after an accelerated pace in the fourth quarter of 2015.
The Bank of Israel's Composite State of the Economy Index rose by 0.25% in February, similar to its growth rates in previous months, which is a sign of a steady growth rate in the economy. The Composite State of the Economy Index for the month was positively impacted by higher turnvover in the commercial and service sectors in January and from increases in the import of raw materials for production, as well a rise in job vacancies in February.
A drop in industrial manufacturing in January and a decrease in commercial exports in February moderated the rise in the index.
Published by Globes [online], Israel business news - www.globes-online.com - on April 12, 2016
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