r , raising stagflationary concerns for the global economy. Israel continues its air attacks in Gaza and prepares for a ground operation. Meanwhile, the US has seen stepped up drone attacks targeting its military bases in Iraq and Syria. Further underlining the risk of an escalation, fighting is also taking place in the north of Israel between the Israeli Defence Forces and Lebanon’s Hezbollah , and in the Syrian border region.
We expect the former to show gradual cooling in services sector activity growth, while any further upticks in the manufacturing index are likely to remain modest for now. We expect GDP to have grown by 3.3% q/q AR, driven by still upbeat private consumption and structures investment. While growth has remained stronger than we have anticipated for now, we still foresee weakening towards the winter not least amid tightening financial conditions, and think the Fed is done with hiking rates.