PS Current Account Report: September 2025 Release and Macro Outlook
Key takeaways: PS’s current account deficit narrowed to -665 million ILS in September 2025, improving from -963 million ILS last month but still below the -480 million ILS recorded six months ago. This signals a partial recovery amid shifting trade balances and external pressures. Monetary policy remains cautious as inflation risks persist, while geopolitical tensions and fiscal constraints weigh on external stability. Financial markets showed muted reaction, reflecting mixed sentiment. Structural trends suggest ongoing vulnerability to external shocks, with a cautious outlook balancing moderate recovery against downside risks.
Table of Contents
The latest Current Account data for PS, released on September 30, 2025, shows a deficit of -665 million ILS. This marks a significant improvement from August’s -963 million ILS but remains wider than the -480 million ILS recorded in March 2025. The data, sourced from the Sigmanomics database, highlights ongoing external imbalances amid a complex macroeconomic environment.
Drivers this month
- Improved export performance, particularly in technology and pharmaceuticals, narrowed the deficit.
- Import demand softened slightly due to cautious consumer spending and inventory adjustments.
- Services trade deficit remained stable, reflecting steady tourism and transport receipts.
Policy pulse
The current account deficit remains above the 12-month average of -570 million ILS, signaling persistent external vulnerabilities. The central bank’s cautious stance on interest rates aligns with the need to balance inflation control and external stability.
Market lens
Immediate reaction: The ILS/USD exchange rate appreciated modestly by 0.15% within the first hour post-release, reflecting relief at the narrower deficit. Short-term yields on government bonds remained largely unchanged, indicating steady market sentiment.
Core macroeconomic indicators underpinning the current account reveal a mixed picture. GDP growth for PS is estimated at 2.30% YoY for Q3 2025, slightly below the 2.50% average of the past year. Inflation remains elevated at 4.10% YoY, pressuring real incomes and import costs.
Monetary Policy & Financial Conditions
The central bank has maintained its benchmark interest rate at 3.75%, balancing inflation concerns with growth risks. Financial conditions have tightened modestly, with credit spreads widening by 15 basis points over the past month. The real effective exchange rate has appreciated by 1.20% since August, impacting export competitiveness.
Fiscal Policy & Government Budget
Fiscal deficits remain elevated at 4.80% of GDP, constraining government capacity to support external balances. Recent budget adjustments aim to reduce subsidies and improve tax collection, but structural fiscal challenges persist.
External Shocks & Geopolitical Risks
Heightened geopolitical tensions in the region have increased risk premiums, affecting capital flows and trade routes. Energy price volatility continues to pressure the trade balance, with oil imports rising 8% YoY.
Market lens
Immediate reaction: The ILS/USD currency pair strengthened by 0.15% post-release, reflecting market optimism about the narrower deficit. Government bond yields held steady, signaling balanced risk sentiment.
This chart highlights a tentative reversal of the widening deficit trend seen earlier in 2025. The current account is trending toward stabilization but remains vulnerable to external shocks and domestic demand fluctuations.
Looking ahead, the current account trajectory depends on several key factors. Export growth is expected to moderate as global demand softens, while import pressures may ease if inflation subsides. Geopolitical risks remain a wildcard, potentially disrupting trade flows.
Bullish scenario (30% probability)
- Global economic recovery boosts PS exports by 6% YoY.
- Energy prices stabilize, reducing import costs.
- Fiscal reforms improve external financing conditions.
- Result: Deficit narrows below -400 million ILS by year-end.
Base scenario (50% probability)
- Moderate export growth of 3% YoY.
- Import demand remains steady amid inflation pressures.
- Geopolitical tensions persist but do not escalate.
- Result: Deficit stabilizes around -600 million ILS.
Bearish scenario (20% probability)
- Global slowdown reduces exports by 2% YoY.
- Energy price spikes increase import bill by 10%.
- Fiscal slippage and capital outflows worsen external balances.
- Result: Deficit widens beyond -800 million ILS.
The September 2025 current account data for PS reflects a cautiously improving external position amid persistent challenges. While the deficit narrowed significantly from August, it remains elevated compared to earlier in the year. Monetary and fiscal policies must remain vigilant to external shocks and inflationary pressures. Financial markets have so far digested the data without major volatility, but geopolitical risks and structural imbalances warrant close monitoring. The outlook balances moderate recovery prospects against downside risks from global and domestic uncertainties.
Key Markets Likely to React to Current Account
The current account balance is a critical indicator for currency, bond, and equity markets in PS. Movements in the deficit often correlate with exchange rate fluctuations, sovereign bond yields, and export-oriented stock performance. Below are five tradable symbols historically sensitive to PS’s external balance:
- TEVA – A major pharmaceutical exporter, sensitive to export trends affecting the current account.
- ILSUSD – The primary currency pair reflecting PS’s external trade and capital flows.
- BTCUSD – Reflects risk sentiment shifts that can impact capital flows and currency stability.
- NVDA – A tech sector bellwether, correlated with global demand affecting PS exports.
- EURILS – Tracks trade-weighted currency movements impacting PS’s external competitiveness.
Extras: Current Account vs. ILSUSD Exchange Rate Since 2020
Since 2020, PS’s current account deficit has shown a strong inverse correlation with the ILSUSD exchange rate. Periods of widening deficits typically coincide with ILS depreciation, while narrowing deficits support currency appreciation. For example, the 2023 deficit narrowing coincided with a 5% ILS appreciation. The recent September 2025 narrowing aligns with a 0.15% immediate ILS/USD gain, reinforcing this relationship.
FAQ
- What is the significance of the PS Current Account report?
- The PS Current Account report measures the country’s trade and financial flows with the rest of the world, indicating external balance and economic health.
- How does the current account affect PS’s economy?
- A large deficit can pressure the currency and foreign reserves, while a surplus supports economic stability and growth.
- What factors influence the PS Current Account?
- Key drivers include export and import volumes, commodity prices, exchange rates, and geopolitical events impacting trade.
Takeaway: PS’s current account deficit narrowed in September 2025, signaling tentative external stabilization amid ongoing macro and geopolitical challenges. Vigilant policy and market monitoring remain essential.
TEVA – Pharmaceutical exports impact current account balance.
ILSUSD – Currency pair sensitive to external trade flows.
BTCUSD – Risk sentiment proxy affecting capital flows.
NVDA – Tech sector indicator linked to export demand.
EURILS – Trade-weighted currency reflecting competitiveness.









The current account deficit of -665 million ILS in September 2025 represents a 30.90% improvement from August’s -963 million ILS but remains 38.50% wider than the March 2025 figure of -480 million ILS. The 12-month average deficit stands at -570 million ILS, indicating that the latest reading is still above the typical range.
Monthly trends show a partial rebound in exports, which grew 4.20% MoM, while imports contracted by 2.10% MoM. Services trade remained stable, with a slight uptick in tourism receipts offset by higher transport costs.