Analysts Flunk Out in 2015 Forecasts on Israeli Economy

YERUSHALAYIM -

Experts on the Israeli economy have had better years than 2015.

According to Globes on Sunday, the analysts of leading investment houses in the country failed to forecast some of the most important developments over the course of the year.

Probably the most blatant bumble was in not foreseeing the collapse of the oil price, which has had staggering effects on markets everywhere, including Israel. For example, the plunge in fuel costs was largely responsible for El Al’s financial comeback. A year ago, analysts said they expected the end of the year price to be $69 a barrel, almost double the actual price of $37.

Investors who heeded the experts’ advice also missed out on the big gains in telecommunications. Returns were reported in the sector of 20 percent or more.

On the other hand, positive recommendation for the energy sector were off the mark in the other direction, as the local Gas and Oil Index recorded a negative return of 5 percent.

In their forecasts for the Tel Aviv 25 Index in 2015, the Israeli analysts were over-optimistic. They forecast a rise of 8 percent, when in fact the index rose by only 4.2 percent. They were also unduly optimistic about the U.S. market, projecting a 4 percent rise for the S&P 500 which in the event ended the year flat.

The shekel-dollar exchange rate was NIS 3.89/$ at the end of 2015, 4.5 percent lower than the average forecast of the investment houses and analysts.

The forecasters showed optimism out of line with reality on the macro level as well. They forecast that Israel’s economy would grow by 3 percent. According to the latest figures published by the Central Bureau of Statistics, last year’s GDP growth figure will be 2.3 percent.

The analysts also forecast inflation of 1 percent for the year, when, according to a recent Bank of Israel statement, the true figure will turn out to be minus 0.9 percent.

The figures were based on an anonymous questionnaire submitted to local analysts and investment houses.