Economic Trends/Outlook in Israel

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Economic Overview

While enduring the effects of the global economic crisis, Israel has experienced in 2009 an economic slowdown phase, without having to go into recession due to a cautious monetary and fiscal policy.  The growth rate, which was revived in 2010, is estimated to be 4.2% and it is led by three different drivers: a dynamic private consumption, a high level of investment in companies and in R&D, and an increase in exports.  The growth should slow down in 2011 due to the presumed weakness of the economies of Israel's main trade partners which are the United States and the European Union. 

The priority of Israel is to maintain growth and control inflation on the context of the currency appreciation (Shekel) and the rise in real estate prices.  The government has established a pro-active policy in order to reduce the public debt and inflation.  Measures have been taken to reduce VAT and taxes in order to maintain domestic consumption. 

Israel enjoys one of the highest standards of living in the area and the average salary is at a close level to the European average.  However, 25% of Israelis live in poverty and inequalities are strong.  The unemployment rate experienced a rise with the global crisis, surpassing 7%, but it has decreased to around 6% in 2010. 

Main Indicators 2009 2010 2011 2012 2013
GDP (billions USD) 195.39 213.15e 234.91e 248.99e 262.03e
GDP (Constant Prices, Annual % Change) 0.8 4.6e 3.8e 3.8e 3.7e
GDP per Capita (USD) 26,874 28,686e 30,934e 32,082e 33,036e
General Government Balance (in % of GDP) -5.1e -4.2e -3.5e -2.8e -2.3e
General Government Gross Debt (in % of GDP) 80.4e 77.9e 73.0e 70.0e 67.5e
Inflation Rate (%) 3.3 2.7e 3.0e 2.5e 2.4e
Unemployment Rate (% of the Labor Force) 7.6 6.7e 5.5e 5.0e 6.8e
Current Account (billions USD) 7.19e 7.73e 7.79e 7.75e -
Current Account (in % of GDP) 3.7e 3.9e 3.7e 3.5e -

Source: IMF - World Economic Outlook Database

Note: (e) Estimated Data


Main Sectors of Industry

Israel has a diversified and technologically advanced economy.  The agricultural sector employs 2% of the population and the country's main crops are fruits and vegetables, cereals, wine and cattle farming.  The country is self-sufficient in food production, with the exception of cereals.

The fields of excellence of the Israeli industry are chemical products (Israel specializes in generic medicines), plastics engineering and high technologies.  The companies, particularly those of the state-of-the-art technology, have profited from the collection of funds arriving from Wall Street and other financial centers of the world.  As a fact, Israel classifies second, after Canada, for the number of companies registered in the American stock market.  The  state-of-the-art technologies (aeronautics, electronics, telecommunications, software, bio-technologies) represent about 40% of GDP.  The other important activity sectors in Israel are diamond cutting, textile and tourism.  This last one is always significant despite the Israeli-Palestian conflict. 

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.6 21.9 75.6
Value Added (in % of GDP) - - -
Value Added (Annual % Change) - - -

Source: World Bank - Last Available Data.

For more detailed background on Industries in Israel, click here.

Indicator of Economic Freedom

Moderately free
World Rank:
Regional Rank:

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation


Country Risk

See the Country Risk Analysis Provided By Ducroire.


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    Government Trade Promotion, Hong Kong SAR

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    U.S. Department Of Commerce, Israel