Israel Economic Forecast

Israel Economic Outlook

June 7, 2022

Following three quarters of rapid expansion, economic activity shrank in quarter-on-quarter terms during Q1, with private consumption, public spending, fixed investment and exports all weakening. Nonetheless, the economy’s underlying strengths remained intact: The labor market tightened notably, while Covid-19 restrictions were eased. The economy should return to growth in Q2: In April, the unemployment rate tumbled below its pre-pandemic level, while the Composite State of the Economy Index rose at its fastest pace in six months. Moreover, visitor arrivals were up 28% from the prior month in April, and the scrapping of all remaining travel restrictions from mid-May will be boosting tourism towards the end of the quarter. Finally, the global energy crisis is benefiting Israel’s gas sector: The government recently renewed gas exploration and hopes to soon reach a deal to supply gas to Europe.

Israel Economic Growth

Growth should be rapid this year, sustained by recovering tourism, a booming tech sector, stronger gas output and improving relations with Gulf neighbors. The most recent example of strengthening ties came in late May, with the formal signing of a trade deal with the UAE covering 95% of tradable products. However, higher inflation and unrest in Palestine are risks. FocusEconomics analysts see the economy expanding 4.9% in 2022, which is down 0.2 percentage points from last month’s forecast, before growing 3.5% in 2023.

Israel Economy Data

2015 2016 2017 2018 2019
Population (million)8.48.58.78.99.1
GDP per capita (USD)35,79037,35040,56341,67443,658
GDP (USD bn)300319353370395
Economic Growth (GDP, annual variation in %)2.24.03.63.53.5
Consumption (annual variation in %)3.85.73.33.83.8
Investment (annual variation in %)0.012.94.25.01.1
Industrial Production (annual variation in %)2.21.73.73.52.9
Unemployment Rate5.34.84.24.03.8
Fiscal Balance (% of GDP)-2.1-2.1-2.0-2.9-3.7
Public Debt (% of GDP)63.861.859.960.459.6
Inflation Rate (CPI, annual variation in %, eop)-1.0-0.20.40.80.6
Inflation Rate (CPI, annual variation in %)-0.6-0.50.20.80.8
Policy Interest Rate (%)0.100.100.100.250.25
Exchange Rate (vs USD)3.903.853.473.753.46
Exchange Rate (vs USD, aop)3.893.843.603.603.56
Current Account (% of GDP)5.23.62.42.63.6
Current Account Balance (USD bn)15.511.48.39.514.3
Trade Balance (USD billion)-3.4-8.3-11.4-18.3-16.9
Exports (USD billion)57.155.657.258.959.0
Imports (USD billion)60.563.968.577.175.9
Exports (annual variation in %)-9.6-2.72.93.00.3
Imports (annual variation in %)-14.95.67.212.6-1.6
International Reserves (USD)90.698.4113115126
External Debt (% of GDP)28.727.325.125.326.2

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Israel Facts

Value Change Date
Bond Yield0.98-1.69 %Jan 01
Exchange Rate3.46-0.37 %Dec 31

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