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Investing.com - JPMorgan has reduced its 2025 GDP growth forecast for Israel to 2.0% from its previous estimate of 3.2%, citing impacts from the ongoing regional conflict.
The financial services firm also raised its projection for Israel’s budget deficit to 6.2% from approximately 5.0% previously, reflecting the fiscal pressures created by the military operations.
JPMorgan analysts expect the war to contribute to inflationary pressures in Israel’s economy, potentially delaying the Bank of Israel’s interest rate cutting cycle.
The firm now anticipates the Bank of Israel will implement its first interest rate cut in November, pushed back from its earlier projection of September.
JPMorgan noted that a "constructive resolution" to the conflict could improve conditions, potentially lowering risk premiums and strengthening the Israeli shekel (ILS), which might create room for earlier interest rate cuts than currently forecast.
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