Concerns are growing about the Israeli economy, with major financial institutions expressing doubts about the country's ability to manage its financial challenges and achieve economic development Sustainable. Both Citibank and JP Morgan issued reports warning about recent macroeconomic data and potential future risks, according to the Israeli economic newspaper Globes.
More rating downgrades on the horizon
In an analysis published by Citibank, the bank highlighted the concerns expressed by International rating agencies which recently downgraded its credit ratingIsrael.
The bank noted that Israel's credit rating remains in a critical state, with no clear solution to the ongoing regional tension. The bank noted that the difference between Bonds The Israeli government's dollar and U.S. counterparts reached about 200 basis points, according to the newspaper.
The bank explained that there is a high possibility of further cuts, especially from Moody'sdue to doubts surrounding the Israeli government's ability to control Fiscal deficit.
Citibank expects the budget deficit as a percentage of GDP to reach 7.6%, which is much higher than the target set by the Israeli Ministry of Finance of 6.6%.
This forecast, according to the newspaper, reflects the bank's doubts about the Israeli government's commitment to raising taxes or cutting spending. The bank said the country may face difficulty in repairing its budget in the wake of economic shocks, which could jeopardize its financial stability.
JPMorgan revises growth forecasts
JP Morgan also issued a disappointing report on the Israeli economy, lowering its growth forecast. gross domestic product For Israel in 2024 from 1.6% to 1.4%.
The revision came after disappointing economic data, according to Globes, including annual growth of 1.2% in the second quarter, well below market expectations of 5.8%-5.9%. The bank pointed to a drop in investments and a sharp decline in exports, adding to the challenges facing the Israeli economy.
Although private consumption remains strong, the bank warned that the Bank of Israel is likely to focus on addressing Inflation More than promoting economic growth.
JPMorgan expects to Central Bank By reducing interest rate By 0.25% next November, and by 0.75% by mid-2025, which contradicts the Bank of Israel’s more conservative forecast.
Globes sees the ratings issued by both Citibank and JP Morgan as confirmation of the growing economic uncertainty in Israel.
With rising geopolitical risks, slowing growth and financial challenges, the country's economic outlook looks far from stable.
