Bank Leumi is pessimistic about the Israeli economy in 2013, predicting slower growth and higher unemployment. "Looking forward, we believe that in view of the slowing growth rate, unemployment will rise moderately, which will affect private consumption by households," says the bank today in its weekly macroeconomic report.
"We believe that the growth rate will be 2.8% in 2013, excluding the effect of changes in methodology related to the start of the use of natural gas. Inclusion of these changes, the effect of which on the growth rate is only technical, growth will be 3.6%," adds Bank Leumi.
Bank Leumi says that the decline in the housing supply will not boost prices in the coming year. It says that 1,300 new homes were sold in November 2012, compared with the monthly average of 1,250 new home sales in January-November. "Housing demand for new homes has been stable in the past year, except for a drop in sales during the holiday season (September-October)," it says.
Bank Leumi believes that companies will face several challenges during 2013, despite the optimism on the Tel Aviv Stock Exchange (TASE) at the start of the year. "The slowing growth rate will likely affect the banks' credit income and reduce demand for income-producing real estate," says the bank. It therefore believes that, in the short term, trading on the TASE will mainly be affected by foreign developments, and that there is a strong chance of a correction on the TASE. "Taking the price levels reached by many shares on the Tel Aviv 25 Index, and the many challenges facing quite a few companies," at this time were prefer investing in tier-2 stocks over tier-1 stocks," says the bank.
Published by Globes [online], Israel business news - www.globes-online.com - on January 6, 2013
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