Publication of the Statistical Bulletin for 2016
Part one of the bulletin is intended to provide the public with easy and friendly access to the main data and aggregates regarding financial activity in Israel, together with information and explanations about the data, definitions and calculations, regarding four main topics in Israel’s financial statistics: the public’s financial assets portfolio; nonfinancial private sector debt; Israel’s economic activity vis-à-vis abroad; and foreign exchange activity of the principal sectors.
a. The public’s financial assets portfolio
· The balance of the public’s financial assets portfolio continued to increase in 2016, mainly in the cash, current accounts, and deposits components.
· The downward trend of the portion of the portfolio managed directly by the public (including mutual funds) continued during the year, in parallel with an increase in the portion of the portfolio managed by institutional investors.
· The decline in mutual fund balances in the asset portfolio continued, against the background of continued net redemptions from money market funds and some of the funds specializing in bonds.
· In 2016, the rate of exposure of most institutional investors to foreign assets declined for the first time since 2008.
b. Nonfinancial private sector debt
· The increase in outstanding household debt continued in 2016, but the increase was slightly less than in 2015 (6.2 percent compared with 6.5 percent).
· Similar to the previous two years, there was a greater increase in nonhousing debt than there was in housing debt, where there has been a marked continued slowdown.
· Outstanding nonfinancial private sector debt continued to increase in 2016, at a higher rate (4.9 percent) than in the previous year. This increase is mainly due to a quantitative increase in debt of both the business sector and households.
· Outstanding business sector debt increased by about 4.1 percent in 2016—a higher rate of increase than in previous years. Most of the increase was concentrated in debt to nonbank entities through tradable bonds. The increase in debt to banks was slower than in previous years.
c. Israel’s economic activity vis-à-vis abroad
· The increase in surplus assets over liabilities vis-à-vis abroad accelerated in 2016, aided by contrary developments in the stock indices—an increase in stock prices abroad and a decline in stock prices in Israel.
· The net flow of investments had a smaller effect on the balance of surplus assets this year than in previous years.
· In 2016, the upward trend in the balance of Israel’s assets abroad continued, mainly due to a significant volume of direct investments abroad by Israelis, the continued increase in foreign currency reserves, and an increase in global capital market prices.
· Contrary to previous years, net financial investments by the private sector in foreign stocks and bonds was particularly low. The decline in the volume of investments abroad was characteristic of all portions of the nonbanking private sector.
· Israel’s liabilities to abroad declined in 2016, in contrast with the increase in 2015. The flow of net direct and financial investments by nonresidents continued, but it was more than offset by a sharp decline in the prices of Israeli stocks held by nonresidents.
d. Foreign exchange activity of the principal sectors
· Due to the increase in the import of goods and services in 2016, there was an increase in foreign exchange purchases by importers, in parallel with a moderation of foreign exchange sales by exporters.
· In 2016, nonresidents made net sales of foreign exchange and reduced their exposure to an appreciation of the shekel. In contrast, the business sector made a significant volume of net purchases of foreign exchange, mainly a result of increasing foreign exchange purchases by importers. Institutional investors also made net foreign exchange purchases, at a moderate volume.
· The shekel strengthened moderately against the dollar in 2016, while the dollar strengthened against the major currencies. The shekel strengthened by a more significant rate in terms of the nominal effective exchange rate.
Part two of the bulletin presents three studies in the field of statistical methodology:
a. Measuring institutional investors’ exposure to foreign exchange and foreign assets
Institutional investors are entities that manage the public’s long-term savings, and are important players in the financial system. As part of the regular monitoring of their activity, the Bank of Israel’s Information and Statistics Department estimates the exposure of savers to various risks in the portfolio managed for them by the institutions. This work focuses on measuring exposure to foreign exchange and exposure to foreign assets, outlining the data and their sources, defining the exposures, and providing a graphic demonstration of the main data.
b. Seasonal Adjustments in Economic and Financial Series at the Bank of Israel—A Demonstration of the “New Mortgages Taken Out” Series
“Seasonal adjustment” is a statistical procedure through which the effects of the calendar on a time series are estimated and deleted from the series. Applying this procedure to time series economic and financial data helps in reaching more correct conclusions regarding economic developments. This work is intended to expand upon and deepen knowledge regarding seasonal adjustment and to demonstrate how the Bank of Israel applies it to the “New Mortgages Taken Out” series.
c. Measuring direct investment as a part of the International Investment Position
An analysis of direct investment data shows the robustness of the domestic market and the extent of its openness and attractiveness to foreign investors. These figures are used to in an economic analysis of financial activity vis-à-vis abroad, and in building the balance of payments of the Israeli economy. This work focuses on measuring direct investments as a part of Israel’s assets and liabilities vis-à-vis abroad (the International Investment Position), presents the main terms and definitions in the IIP, and demonstrates the possible uses of direct investment data.
The full publication (in Hebrew) can be accessed on the Bank of Israel’s website, including—for the convenience of users—the main data on each topic, in separate files, as well as links to regularly updated data on the Bank’s website. The English version of the bulletin will be published in the near future.