Opposition lawmakers assailed the governing coalition on Saturday after leading ratings agency Moody’s downgraded Israel’s economic outlook from positive to stable.
Yesh Atid party head Yair Lapid, the leader of the opposition, said the government was causing the country to “fall apart” and should announce immediately that its plans to dramatically overhaul the judiciary will be stopped.
In its decision, Moody’s cited the “deterioration of Israel’s governance” amid the government’s highly contentious effort, which critics warn will erode and even end Israel’s democratic system of governance.
“The announcement… is proof that the regime coup endangers the livelihood of every Israeli citizen. The lies and attempts to blame others will not help in this case,” Lapid tweeted.
“The facts are clear: The government I led handed them a strong and prosperous economy, and under the watch of [Prime Minister Benjamin] Netanyahu and [Finance Minister Bezalel] Smotrich, everything is falling apart,” Lapid said.
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“They should announce that they are stopping the legislative madness, and that they will take care of the economy and the livelihoods of the country’s citizens,” the Yesh Atid leader said.
Late last month, Netanyahu announced a pause to the legislation to weaken the Supreme Court, as the coalition and opposition hold talks to try to achieve a consensus on judicial reform, but the premier also stressed that the effort would resume even if no agreements are reached.
Yisrael Beytenu head Avigdor Liberman, a former finance minister, said that the downgrade was an “economic earthquake,” and that Prime Minister Benjamin Netanyahu “is destroying the Israeli economy.”
Opposition leader Yair Lapid holds a press conference in Tel Aviv on April 9, 2023. (Avshalom Sassoni/Flash90)
“Just in April last year, when I was finance minister, Moody’s raised Israel’s outlook to positive, and I responsibly left the current government with a growing economy and a budget surplus of about NIS 10 billion NIS. And here after three months, we are on the verge of economic collapse,” Liberman said.
“The lack of care for the cost of living, the cheap populism, the promotion of personal interests and the priorities of Netanyahu and his government are costing you, the citizens of the country,” Liberman said.
Yisrael Beytenu party leader Avigdor Liberman speaks during a faction meeting at the Knesset on February 20, 2023. (Yonatan Sindel/Flash90)
Labor MK Naama Lazimi hit out at the “parade of false narratives” for the downgrade that were being circulated on social media by proponents of the overhaul.
“‘It’s the protesters’ fault’ — a lie, it’s the opposite; ‘You [the opposition] are happy about it — we are shocked, and we are just presenting the reality; ‘This is only one [ratings] company out of three’ — the trend is clear. ‘The economy is still stable’ — institutions are weakening, there is corruption, capital and investments are fleeing, social services are being reduced,” Lazimi wrote, calling on citizens to join the anti-overhaul protests on Saturday evening.
Labor MK Naama Lazimi reacts to the floor debate during a Knesset discussion on the coalition’s first judicial reform bill, February 20, 2023. (Yonatan Sindel/Flash90)
Labor lawmaker Efrat Rayten said that “hubris shut the ears and eyes of the leaders of the coup d’état,” adding that “even Netanyahu’s panicked and desperate phone call to the ratings agency failed to repair the enormous damage caused by this evil government.”
Channel 12 reported that in recent days, Netanyahu and President Isaac Herzog, who is hosting compromise talks on the overhaul, held urgent discussions with senior Moody’s officials in a bid to reassure the agency.
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There was no public comment from National Unity leader Benny Gantz, whose party is also involved in the overhaul negotiations at the President’s Residence.
The rating agency report Friday confirmed fears that Israel’s credit outlook could be knocked down, as Moody’s had warned last month.
Weekly mass protests around the country against the government’s plans to weaken the judicial system have continued even after Netanyahu paused the legislation. Coalition members have vowed to press forward with the legislative push after the Knesset’s Passover recess.
Protesters take part in ongoing demonstrations against the government’s judicial overhaul in Tel Aviv on April 8, 2023. (Gil Cohen-Magen/AFP)
On Friday, the agency said the change — which came just a year after Moody’s upgraded Israel’s credit outlook — “reflects a deterioration of Israel’s governance, as illustrated by the recent events around the government’s proposal for overhauling the country’s judiciary.”
“While mass protests have led the government to pause the legislation and seek dialogue with the opposition, the manner in which the government has attempted to implement a wide-ranging reform without seeking broad consensus points to a weakening of institutional strength and policy predictability,” Moody’s strongly worded eight-page report read.
While Israel’s credit outlook took a hit on Friday, the agency kept the country’s actual credit rating at A1, citing “strong economic growth and improving fiscal strength,” it said.
Israel’s economy, Moody’s said, “has proven resilient to many economic and geopolitical shocks over the past decades and has grown at a rapid clip, helped by Israel’s globally competitive high-tech industries. Moody’s baseline projections assume continued robust growth in the medium term.”
“The Israeli economy has grown at a rapid rate over the past several years, averaging 4.1% over the decade to 2022, helped to an important extent by the globally competitive and increasingly diversified high-tech industries,” it said.
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Israel’s vaunted tech sector has long been touted as the main engine of Israel’s economic growth, accounting for 49% of total exports and generating around 15% of GDP in 2022.
It has been a key part of the opposition to the government’s judicial plans, with some firms moving significant funds abroad and threatening to relocate if democracy is harmed.
Moody’s warned Friday that Israel’s credit ratings could also come “under downward pressure if the current tensions were to turn into a prolonged political and social crisis with material negative impact on the economy, possibly linked to substantially lower capital inflows into the important high-tech sector and relocation of Israeli firms abroad.”
Tech workers protest against the government’s judicial overhaul ‘time is running out for Israeli high-tech,’ in Tel Aviv, on March 23, 2023. (Avshalom Sassoni/Flash90)
Moody’s said that while the Israeli government was indeed holding deliberations, it has also “reiterated its intention to change how judges are selected. This means that the risk of further political and social tensions within the country remains.” But should a compromise be reached “without deepening these tensions, the positive economic and fiscal trends that Moody’s had previously identified remain.”
Earlier this month, the OECD cautioned that the country’s pace of economic growth is expected to moderate, warning that “risks are skewed to the downside, related to high global and domestic uncertainty.” The organization sees GDP slowing from the 6.4% growth rate last year to 3% in 2023 and 3.4% in 2024.
On Friday, the release of the March consumer price index (CPI), a measure of inflation that tracks the average cost of household goods, showed an increase of 0.4% from February. CPI has been hovering above 5% in annual terms for the past six months, falling short of the government’s target range of 1% to 3%.
The rise in inflation came despite steps taken by the Bank of Israel to rein it in. The central bank has over the past year steadily hiked its benchmark interest rate from a record low of 0.1% last April to 4.5% earlier this month in a bid to bring down price growth.
Inflation has been slower to ease in part due to a weaker shekel, which is making imported goods more expensive. Since the beginning of this year, the local currency has depreciated about 4% against the US dollar. The US dollar index, which measures the greenback against six major world currencies, has declined about 2% since the start of 2023.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
