Business Environment in Israel
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.
|GDP (billions USD)||195.39||213.15e||234.91||248.99||262.03|
|GDP (Constant Prices, Annual % Change)||0.8||4.6||3.8e||3.8e||3.7e|
|GDP per Capita (USD)||26,874||28,686e||30,934e||32,082||33,036e|
|General Government Balance (in % of GDP)||-5.1e||-4.2||-3.5e||-2.8||-2.3|
|Inflation Rate (%)||3.3||2.7||3.0e||2.5||2.4|
|Unemployment Rate (% of the Labor Force)||7.6||6.7||5.5e||5.0e||6.8|
|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.
|Israeli New Sheqel. (ILS) - Average Annual Exchange Rate For 1 USD||4.49||4.46||4.11||3.59||3.93|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
The Israeli economy is extremely open. Israel's exports represent around 24% of the GNP. They are the backbone of the country's growth.
In 2009, Israel's trade balance, which was previously in deficit, recorded a historical surplus due to a strong drop on imports. The situation was again reversed in 2010, a trend that should continue in 2011.
The main customers and suppliers of Israel are the European Union, the United States, Turkey, Japan, India and China. The main goods imported by the Israeli state are raw materials and half-finished products, hydrocarbons, consumption goods (food products and drinks, electrical equipment, transport equipment, etc.) and investment products. The main national exports are manufactured goods which are often high technology products (computer equipment, electronic components, aeronautics, electronic communication equipment, verification products and pharmaceutical products).
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||50,334||59,039||67,656||49,278||61,250|
|Exports of Goods (million USD)||46,789||54,091||61,337||47,935||58,432|
|Imports of Services (million USD)||14,424||17,322||19,629||16,865||17,440|
|Exports of Services (million USD)||19,184||21,115||24,284||21,961||24,333|
|Imports of Goods and Services (Annual % Change)||3.3||11.9||2.4||-||-|
|Exports of Goods and Services (Annual % Change)||6.0||9.3||5.2||-||-|
|Imports of Goods and Services (in % of GDP)||42.3||44.0||41.6||32.2||-|
|Exports of Goods and Services (in % of GDP)||42.8||42.7||40.0||34.7||-|
|Trade Balance (million USD)||-3,836||-5,684||-7,238||-96||-|
|Trade Balance (Including Service) (million USD)||693||-2,156||-3,063||-||-|
|Foreign Trade (in % of GDP)||85.1||86.7||81.5||66.9||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||47.0%|
(% of Imports)
|Other partnersClose extended list||60.7%|
Sources of General Economic Information
Ministry of Agriculture and Rural Development
Ministry of Foreign Affairs
Ministry of Industry and Trade
Ministry of Communications
Ministry of Construction and Housing
Ministry of Finance
Ministry of Tourism
- Statistical Office
Central Bureau of Statistics
- Central Bank
Bank of Israel
- Stock Exchange
Tel-Aviv Stock Exchange
- Search Engines
- Economic Portals
Port2Port, Israeli Trade Portal
- Executive Power
- The President is Head of the State and he is elected by the Parliament of the country for a seven year term. His role is essentially ceremonial. The President chooses the leader of the party or majority coalition in the parliament to exercise the functions of the Prime Minister, for a four year term. The Prime Minister is head of the government and it is he who holds the executive power, namely the execution of the law and management of current affaire of the country. The Cabinet is chosen by the Prime Minister before being approved by the Parliament.
- Legislative Power
- The legislative power is Israel is unicameral. The parliament consists of 120 members, elected by universal suffrage universal for a four year term. The parliament can decide to be dissolved by a simple majority, during a censure motion. The Prime Minister cannot directly dissolve the parliament, he cannot veto it. The Israeli citizens have considerable political rights.
- Main Political Parties
- The Israeli political system is based on proportional representation, which allows having a system with several parties. No one is in a position to solely assume power,which forces them to cooperate to form coalition governments. The main political parties of the country are :
- Kadima : centrist party, which advocates fixing the borders with the future Palestinian State;
- The Workers Party (Havoda) : left center zionist political party;
- Le Likoud : right nationalist party which draws its roots from the Zionist movement
- Shas : advocates ultra-orthodox Judaism.
- Current Political Leaders
- President: Shimon PERES (since July 2007)
Prime Minister: Binjamin NETANYAHU (since March 2009) as head of the coalition government
- Next Election Dates
- Presidential: 2014 ; legislative : 2013.
Indicator of Freedom of the Press
- World Rank:
- 47 places down compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
Any Comments About This Content? Report It to Us.
The Israeli economic slowdown, a strong dollar, and a reduction in U.S. corn exports combined with a good grain harvest in the countries of the Former Soviet Union have slowed imports.
Foreign Agricultural Service on 11 Jan 2013 related to Business Environment in Israel
In the past two decades, the Israeli economy has changed radically, moving away from agricultural and low-tech industries to become a high-tech powerhouse.
Hong Kong Trade Development Council (HKTDC) on 30 Jun 2012 related to Business Environment in Israel
2012 Country Commercial Guide for U.S. Companies doing business in Israel.
U.S. Commercial Service Israel on 27 Apr 2012 related to Business Environment in Israel
The U.S. is Israel's largest single country trade partner. Since signing a Free Trade Agreement in 1985, Israel–US trade has grown eight-fold.
U.S. Commercial Service Israel on 18 Aug 2010 related to Business Environment in Israel
An overview of the business environment in Israel
U.S. Commercial Service Israel on 14 Sep 2010 related to Business Environment in Israel
Part of USDA, the United StatesThe Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA) works to improve foreign market...
Government Trade Promotion, Hong Kong SAR
U.S. Department Of Commerce, Israel