Israel

We’ve added more of the survey- and calculation-based inflation expectations released by the Bank of Israel. New series include one-year expectations derived from inflation contracts, economic surveys for three to five years out, and calculations involving major banks’ interest rates.

In the chart below, our upper pane plots Israel’s CPI against the high-low range of three data points (the grey belt) corresponding to different 12-month inflation expectations at the time. 

The chart shows that inflation expectations a year out have often tended to track current CPI trends. 

In the lower pane, we plot the difference between the current actual CPI and the ‘high’ of the 3 CPI forecasts for the year ahead. The current negative reading indicates that expectations are factoring in declining inflation.

New Zealand

We’ve added the government’s most recent economic and budgetary forecasts (released a month ago as a pre-election update) to our public finance dataset. 

In the chart below, we chart the yearly evolution of the government’s revenue against its expenses as a percentage of GDP – followed by predictions through 2027 from both the pre-election budgetary update and the forecast that preceded it. The data point “bubble” size represents gross debt in NZD. 

The fiscal damage from COVID-19 is profoundly visible in the trajectory from 2019 to 2020. The gross debt “bubble” size starts visibly increasing from 2022, growing substantially by 2027 in both rounds of forecasts. 

Both forecasts also predict continued growth in government revenue as a percentage of GDP, though the pre-budget forecast is showing a slightly smaller increase than its predecessor. It’s notable that the previous forecast accurately predicted 2023 spending as a proportion of GDP, but significantly undershot income on that basis as a slowing global economy reduced tax revenue. In line with the pre-election update’s forecast for a wider budget deficit in fiscal 2024, projected expenses as a share of GDP were revised upward. 

Since this forecast was released, New Zealand’s conservative opposition defeated the incumbent Labour government. The National party has promised tax cuts, so look for their first budget forecasts to differ from this chart.