Israel Economy - 2021

GEOGRAPHICAL NAMES 

Economic overview

Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.

Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals, following years of prudent fiscal policy and a resilient banking sector. Israel's economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East insulated the economy from spillover effects.

Slowing domestic and international demand and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.8% per year during the period 2014-17. Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. Political and regulatory issues have delayed the development of the massive Leviathan field, but production from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in 2014. One of the most carbon intense OECD countries, Israel generates about 57% of its power from coal and only 2.6% from renewable sources.

Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high in 2016. Private consumption is expected to drive growth through 2018, with consumers benefitting from low inflation and a strong currency.

In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.

Real GDP growth rate

3.28% (2019 est.)

3.69% (2018 est.)

3.63% (2017 est.)

Inflation rate (consumer prices)

0.8% (2019 est.)

0.8% (2018 est.)

0.2% (2017 est.)

Credit ratings

Fitch rating: A+ (2016)

Moody's rating: A1 (2008)

Standard & Poors rating: AA- (2018)

Real GDP (purchasing power parity)

$363.448 billion (2019 est.)

$351.254 billion (2018 est.)

$339.528 billion (2017 est.)

note: data are in 2010 dollars

GDP (official exchange rate)

$394.93 billion (2019 est.)

Real GDP per capita

$40,145 (2019 est.)

$39,543 (2018 est.)

$38,967 (2017 est.)

note: data are in 2010 dollars

Gross national saving

24.7% of GDP (2019 est.)

24.4% of GDP (2018 est.)

24.4% of GDP (2017 est.)

GDP - composition, by sector of origin

agriculture: 2.4% (2017 est.)

industry: 26.5% (2017 est.)

services: 69.5% (2017 est.)

GDP - composition, by end use

household consumption: 55.1% (2017 est.)

government consumption: 22.8% (2017 est.)

investment in fixed capital: 20.1% (2017 est.)

investment in inventories: 0.7% (2017 est.)

exports of goods and services: 28.9% (2017 est.)

imports of goods and services: -27.5% (2017 est.)

Ease of Doing Business Index scores

Overall score: 76.7 (2020)

Starting a Business score: 94.1 (2020)

Trading score: 83.4 (2020)

Enforcement score: 58.9 (2020)

Agricultural products

milk, potatoes, poultry, tomatoes, carrots, turnips, tangerines/mandarins, green chillies/peppers, eggs, vegetables

Industries

high-technology products (including aviation, communications, computer-aided design and manufactures, medical electronics, fiber optics), wood and paper products, potash and phosphates, food, beverages, and tobacco, caustic soda, cement, pharmaceuticals, construction, metal products, chemical products, plastics, cut diamonds, textiles, footwear

Industrial production growth rate

3.5% (2017 est.)

Labor force

3.893 million (2020 est.)

Labor force - by occupation

agriculture: 1.1%

industry: 17.3%

services: 81.6% (2015 est.)

Unemployment rate

3.81% (2019 est.)

4% (2018 est.)

Population below poverty line

22% (2014 est.)

note: Israel's poverty line is $7.30 per person per day

Gini Index coefficient - distribution of family income

39 (2016 est.)

39.2 (2008)

Household income or consumption by percentage share

lowest 10%: 1.7%

highest 10%: 31.3% (2010)

Budget

revenues: 93.11 billion (2017 est.)

expenditures: 100.2 billion (2017 est.)

Taxes and other revenues

26.5% (of GDP) (2017 est.)

Budget surplus (+) or deficit (-)

-2% (of GDP) (2017 est.)

Public debt

60.9% of GDP (2017 est.)

62.3% of GDP (2016 est.)

Fiscal year

calendar year

Current account balance

$13.411 billion (2019 est.)

$7.888 billion (2018 est.)

Exports

$104.992 billion (2019 est.)

$101.389 billion (2018 est.)

$95.196 billion (2017 est.)

Exports - partners

United States 32%, China 9%, Hong Kong 5% (2019)

Exports - commodities

diamonds, packaged medicines, medical instruments, integrated circuits, refined petroleum (2019)

Imports

$116.23 billion (2019 est.)

$111.652 billion (2018 est.)

$104.252 billion (2017 est.)

Imports - partners

United States 18%, China 14%, Germany 7%, Turkey 6% (2019)

Imports - commodities

diamonds, cars, crude petroleum, refined petroleum, broadcasting equipment (2019)

Reserves of foreign exchange and gold

$113 billion (31 December 2017 est.)

$95.45 billion (31 December 2016 est.)

Debt - external

$99.886 billion (2019 est.)

$94.247 billion (2018 est.)

Exchange rates

new Israeli shekels (ILS) per US dollar -

3.25 (2020 est.)

3.4684 (2019 est.)

3.7332 (2018 est.)

3.8869 (2014 est.)

3.5779 (2013 est.)

NOTE: The information regarding Israel on this page is re-published from the 2021 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Israel 2021 information contained here. All suggestions for corrections of any errors about Israel 2021 should be addressed to the CIA or the source cited on each page.