Israel’s judicial reforms present key downside risks

The Israeli government’s decision to press ahead with its controversial judicial reforms won’t necessarily cause foreign investment into Israel to dry up, but the direction of policymaking threatens to push the economy onto a permanently lower growth path. In the very short-term, widespread protests and strikes may act as a drag on economic activity too. And if the shekel comes under further pressure, the central bank may be forced to hike interest rates to a higher level than we expect.