Economy
Israel’s economic growth to slow to 2% in 2023 due to war -finance ministry
By Steven Scheer
JERUSALEM (Reuters) -Israel’s economy is expected to grow 2% in 2023, down from a prior estimate of 2.7%, the Finance Ministry said on Thursday citing the effects of Israel’s war with Hamas.
For 2024, the ministry projected growth of 1.6% as its main estimate based on a war that will continue through the year but with the most intense fighting ending in the first quarter and largely contained to the southern border with Gaza.
But a more rapid recovery from the war that would end in early 2024 could lead to growth of 2.2% while a war that continues into 2025 and a slower recovery would mean stagnant growth of just 0.2%.
It noted that prior to the war it was set to raise its 2023 forecast to 3.4%, and the war’s impact would be 1.4 percentage points.
The main factor weighing on growth, the ministry said, is poor consumer sentiment that will likely translate into largely flat private spending, Israel’s main growth driver, while exports look to dip 0.6% this year.
The economy grew 6.5% in 2022.
“The war situation is characterized by particularly high levels of uncertainty, but its impact on the economy goes beyond any security incident experienced by the State of Israel during the last two decades,” said a report from the ministry’s chief economist’s office ahead of discussions to update the state budget for 2023 and 2024.
Israel launched its war in Gaza after gunmen from Hamas burst across the border fence on Oct. 7, killing 1,200 people and seizing about 240 hostages, according to Israeli tallies. Since then, more than 14,000 Gazans have been killed by Israeli bombardment, around 40% of them children, according to health authorities in the Hamas-ruled territory.
A four-day temporary truce accord during which some Israeli hostages in Gaza would be freed was announced on Wednesday morning, but Israel said implementation of the deal would be delayed at least until Friday.
The Bank of Israel last month trimmed Israel’s growth estimate for 2023 to 2.3% from 3.0% and to 2.8% next year from a prior 3.0%.
Policymakers have said they would likely refrain from interest rate cuts during the war, instead focusing on targeted steps such as requiring banks to allow customers impacted by the war to defer loan repayments.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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