Israel Economy - 2022

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.

 

Since March 2020, economic growth has slowed compared to recent historical averages, but Israel's slump has been less severe than in other Middle Eastern countries because of its swift vaccine roll-out and diversified economic base. Between 2016 and 2019, growth averaged 3.6% per year, led by exports. Israel's new government is hoping to pass the country's first budget in two years, which, combined with prudent fiscal policy and strong global trade ties would probably enable Israel to recover from economic challenges caused by the COVID-19 pandemic.

 

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. In 2020, Israel began exporting gas to Egypt and Jordan.

 

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. Private consumption is expected to drive growth through 2021, 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 (purchasing power parity)

$353.39 billion (2020 est.)

$362.23 billion (2019 est.)

$350.15 billion (2018 est.)

note: data are in 2017 dollars

Real GDP growth rate

-2.6% (2020 est.)

3.28% (2019 est.)

3.69% (2018 est.)

Real GDP per capita

$38,300 (2020 est.)

$40,000 (2019 est.)

$39,400 (2018 est.)

note: data are in 2017 dollars

GDP (official exchange rate)

$394.93 billion (2019 est.)

Inflation rate (consumer prices)

1.8% (2020 est.)

0.8% (2019 est.)

0.8% (2018 est.)

Credit ratings

Fitch rating: A+ (2016)

Moody's rating: A1 (2008)

Standard & Poors rating: AA- (2018)

note: the year refers to the year in which the current credit rating was first obtained.

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.)

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

4.4% (2020 est.)

3.81% (2019 est.)

4% (2018 est.)

Youth unemployment rate (ages 15-24)

total: 7.9%

male: 7.6%

female: 8.2% (2020 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

37 (2018 est.)

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.)

Budget surplus (+) or deficit (-)

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

Public debt

72.6% of GDP (2020 est.)

59.6% of GDP (2019 est.)

60.4% of GDP (2018 est.)

Taxes and other revenues

26.5% (of GDP) (2017 est.)

Fiscal year

calendar year

Current account balance

$20.642 billion (2020 est.)

$13.411 billion (2019 est.)

$7.888 billion (2018 est.)

Exports

$113.87 billion (2020 est.) note: data are in current year dollars

$115.57 billion (2019 est.) note: data are in current year dollars

$110.05 billion (2018 est.) note: data are in current year dollars

Exports - partners

United States 26%, China 9%, United Kingdom 7% (2020)

Exports - commodities

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

Imports

$96.53 billion (2020 est.) note: data are in current year dollars

$108.26 billion (2019 est.) note: data are in current year dollars

$107.74 billion (2018 est.) note: data are in current year dollars

Imports - partners

United States 12%, China 11%, Germany 7.5%, Switzerland 7%, Turkey 6% (2020)

Imports - commodities

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

Reserves of foreign exchange and gold

$173.292 billion (2020 est.)

$113 billion (31 December 2017 est.)

$95.45 billion (31 December 2016 est.)

Debt - external

$132.5 billion (31 December 2020 est.)

$99.886 billion (2019 est.)

$94.247 billion (2018 est.)

Exchange rates

new Israeli shekels (ILS) per US dollar -

3.44 (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 2022 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Israel 2022 information contained here. All suggestions for corrections of any errors about Israel 2022 should be addressed to the CIA or the source cited on each page.