Credit Suisse Bank’s annual forecast The Israeli economy for the coming year is included in the Bank’s global forecast and indicates that the growth rate of GDP (gross domestic product) in real terms is expected to remain above or around the average growth rate in the years before the corona plague, although growth in 2022 is expected to be more moderate. The expectation is for real GDP to expand by 4.1% and 5.5%, compared with a growth rate of 7.0% -7.1% which was recorded in 2021. The good performance of the economy in 2021 was due, among other things, to the success of the Israeli government in corona virus vaccinations. , And as a result of impressive data on exports of goods and services from Israel. Economy growth in 2022 is expected to be driven by a significant increase in private consumption and investment in fixed assets. This is on the condition that the negative risk to the forecast in 2022 will not increase due to the consequences of the continued disruptions in the world supply chain or the further deterioration of the corona plague.
In their reference To monetary policy Of the Bank of Israel, state the economists of Credit Suisse That the approach to keeping interest rates low in order to stimulate the economy is likely to moderate, But interest rate hikes are not on the doorstep. According to them, the Bank of Israel is expected to remain neutral in the coming months, with the inflation rate likely to rise and reach the upper limit of the target range set by the central bank of 1.0% -3.0%. Still, the structural pressure on the shekel suggests that the bank is expected to maintain interest rates at least 0.1% throughout the first half of the year, and may consider raising interest rates only if inflation surprises. The Bank of Israel forecasts that inflation will moderate from 2.5% in the last quarter of 2021 to 1.6% in the last quarter of 2022.
In the field of exchange rate It seems that the shekel will remain subject to ongoing structural appreciation pressures also in 2022, as a result of a significant current account surplus as well as a constant sale of dollars by local institutional investors while hedging their foreign investments. Although Credit Suisse economists predict that the current account surplus will decline in the coming quarters (from an annual high of 5.7% in the second quarter of 2021 on a rolling basis), the balance of payments situation is expected to continue to support the shekel in the near future. As these trends continue, the Bank of Israel is expected to continue to allow for further gradual and moderate declines in the dollar and euro exchange rate in 2022, as long as inflation remains relatively high. The exchange rate of the dollar against the shekel may fall to NIS 3 to NIS 3.05 in the first half of next year.
Credit Suisse economists estimate that Fiscal policy and the internal political situation Are expected to remain stable. The unity government, led by Naftali Bennett, formed in June 2021 after a long period of political instability passed the budget for 2021/22 in the Knesset earlier this month. At the same time, the fiscal situation has improved since the second quarter of 2021 thanks to an increase in economic activity and a significant increase in tax revenues related to technology and innovation.
World forecast
Investment forecast Global Of Credit Suisse for 2022, expects that global economic growth will remain stable also in 2022 and is expected to generate attractive returns on equities. According to Credit Suisse’s investment forecast for 2022, the global economy is expected to grow by 4.3%. Michael Strobaek Michael Strobaek, Chief Investment Officer of Credit Suisse: Investors should look for investment strategies that follow non-traditional patterns, in order to diversify their investment opportunities.
The coming year is expected to continue the economic recovery trend. According to Credit Suisse’s investment forecast for 2022, the global economy is expected to grow by 4.3%. Although a number of central banks have begun to retreat from the policies adopted at the time of the epidemic, interest rates are expected to remain close to zero in most developed economies. In light of this, stock returns will remain attractive, although they are expected to be more moderate than last year.
The global economy is expected to remain stable in 2022, amid strong demand, support for fiscal and monetary policy and easing corona restrictions. The Bank expects that the shares will provide attractive single-digit returns to investors supported by high profits “against the background of an increase in the companies’ profitability”. In addition to the so-called post-epidemic transition, we believe that 2022 will mark the beginning of a significant transition to a world where the issue of sustainability plays an increasing role for consumers, businesses, governments and regulators. In this context, we expect that environmental, social and governmental trends will be critical and investors will continue to include sustainability considerations in capital allocation.