{"id":249401,"date":"2023-08-04T17:13:00","date_gmt":"2023-08-04T21:13:00","guid":{"rendered":"https:\/\/paju.org\/?p=249401"},"modified":"2023-08-04T17:14:10","modified_gmt":"2023-08-04T21:14:10","slug":"citi-lowers-israeli-growth-forecast-citing-recent-turmoil-over-judicial-overhaul","status":"publish","type":"post","link":"https:\/\/paju.org\/fr\/citi-lowers-israeli-growth-forecast-citing-recent-turmoil-over-judicial-overhaul\/","title":{"rendered":"Citi lowers Israeli growth forecast, citing \u2018recent turmoil\u2019 over judicial overhaul"},"content":{"rendered":"\n<p>Times of Israel Staff   3 August 2023<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">&nbsp;<\/h2>\n\n\n\n<h4 class=\"wp-block-heading\"><em>US bank says it is \u2018not hard to imagine\u2019 a further slowdown in economic output and possible downgrade of credit rating, pointing also to government priorities in other areas<\/em><\/h4>\n\n\n\n<p>Citibank on Thursday lowered its forecast for Israel\u2019s economy in 2023 and 2024, citing a drop in investments due to fears over the government\u2019s judicial overhaul and other policy decisions.<\/p>\n\n\n\n<p>In a new report, the US bank reduced its 2023 growth projection for Israel from 3.3% to 3.1%, while the 2024 forecast fell from 3.3% to 2.8%.<\/p>\n\n\n\n<p>\u201cThe recent turmoil surrounding judicial reform in Israel has raised questions about its impact on the economy,\u201d Citi said. \u201cWhile there may be short-term effects on growth due to disruptions in economic activity, the more significant impact is likely to be on Israel\u2019s potential growth in the intermediate term.\u201d<\/p>\n\n\n\n<p>Citibank on Thursday lowered its forecast for Israel\u2019s economy in 2023 and 2024, citing a drop in investments due to fears over the government\u2019s judicial overhaul and other policy decisions.<\/p>\n\n\n\n<p>In a new report, the US bank reduced its 2023 growth projection for Israel from 3.3% to 3.1%, while the 2024 forecast fell from 3.3% to 2.8%.<\/p>\n\n\n\n<p>\u201cThe recent turmoil surrounding judicial reform in Israel has raised questions about its impact on the economy,\u201d Citi said. \u201cWhile there may be short-term effects on growth due to disruptions in economic activity, the more significant impact is likely to be on Israel\u2019s potential growth in the intermediate term.\u201d<\/p>\n\n\n\n<p>Beyond the controversial overhaul, the report singled out the government\u2019s policy priorities.<\/p>\n\n\n\n<p>\u201cIt is not only the judicial reform legislation that might have a significant impact on potential growth in Israel, but a range of other governmental decisions as well such as budget allocations, education policy, etc.,\u201d the report said, citing the decision to allocate vast chunks of the budget to ultra-Orthodox communities.<\/p>\n\n\n\n<p>\u201cThese decisions will affect many aspects of the country and its economy and, by extension, most asset classes,\u201d the report said. \u201cUnfortunately, it\u2019s not hard to imagine further declines in growth, which may increase the likelihood of a downgrade of Israel\u2019s credit rating,\u201d it warned.<\/p>\n\n\n\n<p>The report comes a week after the bank sent a note to institutional clients telling them the environment in Israel is \u201cmuch more tricky and dangerous,\u201d after the coalition passed the first law in its planned shakeup of the judicial system, counseling investors to hold off until the dust settles.<\/p>\n\n\n\n<p>\u201cThe current events in Israel are challenging\u2026 and making investors increasingly nervous with regards to Israeli assets,\u201d Citi VP Michael Wiesen wrote in the note. \u201cWe urge caution here and to wait for better levels\/calmer market.\u201d<\/p>\n\n\n\n<p>Other financial institutions also sounded bearish notes following approval of the legislation, with US investment bank Morgan Stanley lowering Israel\u2019s sovereign credit to a \u201cdislike stance,\u201d citing \u201cincreased uncertainty about the economic outlook in the coming months.\u201d<\/p>\n\n\n\n<p>Moody\u2019s Investors Service warned about \u201cnegative consequences\u201d and \u201csignificant risk\u201d for Israel\u2019s economy, cautioning that \u201cexecutive and legislative institutions have become less predictable and more willing to create significant risks to economic and social stability,\u201d while Standard &amp; Poor\u2019s said it saw the continued political turmoil threatening economic growth in Israel.<\/p>\n\n\n\n<p>On Wednesday, the&nbsp;<a href=\"https:\/\/www.timesofisrael.com\/bank-of-israel-sees-increased-risk-to-economy-due-to-judicial-overhaul-uncertainty\/\">Bank of Israel said<\/a>&nbsp;that growing and prolonged uncertainty around the implications of the government\u2019s overhaul poses a threat to the country\u2019s financial system and economy.<\/p>\n\n\n\n<p>The reports were issued after the Knesset ratified the so-called reasonableness law despite mass public protests and after efforts to reach a compromise between coalition and opposition parties collapsed. The legislation prevents judicial oversight of government and ministerial decisions on the grounds of reasonableness. The government\u2019s critics say removing the standard opens the door to corruption and improper appointments of unqualified cronies to important positions.<\/p>\n\n\n\n<p>The government has been largely dismissive of the warnings, with Finance Minister Bezalel Smotrich last week blaming the ongoing demonstration<\/p>\n\n\n\n<p>Israeli finance officials and business leaders have consistently warned of the damage to the economy, and high-tech workers make up a prominent part of the protest movement.<\/p>\n\n\n\n<p>The law was the first part in a larger package of bills that critics say will fundamentally alter Israel\u2019s democratic system by stripping the judiciary\u2019s ability to act as a check on the governing coalition.<\/p>\n\n\n\n<p>After passing the \u201creasonableness\u201d law, Prime Minister Benjamin Netanyahu said he would work with the opposition to build consensus and come to a compromise on the rest of the legislative package.<\/p>\n\n\n\n<p><em>Sharon Wrobel contributed to this report.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Citibank on Thursday lowered its forecast for Israel\u2019s economy in 2023 and 2024, citing a drop in investments due to fears over the government\u2019s judicial overhaul and other policy decisions.<\/p>\n<p>In a new report, the US bank reduced its 2023 growth projection for Israel from 3.3% to 3.1%, while the 2024 forecast fell from 3.3% to 2.8%.<\/p>\n","protected":false},"author":4,"featured_media":249403,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[95],"tags":[],"class_list":["post-249401","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-en"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - 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