Video|22 August 2024

MENA – Israel’s Growth Slows & Turkey Holds Rates Amid Inflation Concerns

Scott Livermore

Chief Economist & Managing Director

The rebound in Israel GDP stalled in Q2 with the economy expanding by just 1.2% at an annualised rate. Despite following an upwardly revised expansion of 17.3% in Q1, Israel’s economy has not fully reversed the contraction seen in 2023 Q4. The economy is being driven forward by consumption and government spending which are offsetting the decline in exports. A similar pattern to growth is expected in the rest of year and we forecast GDP to expand by 1.5% in 2025 as a whole.

This week, the Central Bank of Turkey kept its key interest rate unchanged at 50%, despite inflation moderating to 62% in July from 72% in June. The bank expects inflation to fall to 38% by the end of the year. Our view is that this a touch optimistic and we expect the decline in inflation to be more gradual. We therefore anticipate that interest rates remaining on hold until 2025.

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