Israel maintains its growth forecast at 2.7% in 2023 and strengthens its gas exports to Egypt

State revenues are estimated at 463.6 billion ILS (117 billion euros), i.e. 5.3 billion ILS (1.34 billion euros) less than expected. A budget deficit should therefore take hold, rising to 1.1% of GDP this year and 1.35% next year. The budget expenditure linked to the coalition (under discussion in the Knesset) should contribute to the widening of this deficit.

Falling unemployment rate, rising wages: a challenge for the fight against inflation.

According to the latest data, an increase of 7.9% in the average salary was seen in Israel in the first quarter of 2023. At the same time, the unemployment rate continues to fall, which would stand at 3.6%. This situation could contribute to inflation (currently 5% at an annual rate) and encourage the Bank of Israel to once again raise its key rate. A meeting of the Monetary Committee is scheduled for the next few days.

Israel strengthens its gas export capacities to Egypt

The Israeli government has agreed to the construction of a 65 km gas pipeline to increase export capacity to Egypt by 580 million cfd (6 billion m3) per year. The project is valued at 350 million USD with an additional compressor station.

Israel’s export capacity through direct gas pipelines (without passing through Jordan) has already increased from 480 to 770 million cfd (3 billion m3). The “Nitzana” project will be operational in the medium term and will guarantee a rate of gas delivery to Egypt higher than what is currently done (830 billion cfd).

At the same time, the Israeli Prime Minister says he is in favor of the construction of a gas pipeline which would link the Israeli gas fields to Cyprus in order to allow more exports to Europe. This new plan would require the construction of a liquefaction train in Cyprus.