Israel Economic Forecast

Israel Economic Outlook

February 5, 2019

The Israeli economy accelerated strongly in the third quarter from the meager growth rate recorded in the second quarter, on the back of a stronger-than-previously-estimated performance from the external sector. Domestic demand, meanwhile, remained largely unchanged, barring a downward revision to private consumption growth. Looking at the final quarter of last year, the economy is expected to have maintained a robust pace of expansion. This is reflected by solid Composite State of the Economy data and a higher average manufacturing PMI, suggesting an improved performance by the manufacturing sector. Moreover, household consumption should have been buttressed by moderating inflationary pressures and significant gains in consumer sentiment, which—despite reaching a survey-record high in November—still remained entrenched in pessimistic territory. On the other hand, sentiment among businesses waned somewhat towards the end of the year.

Israel Economic Growth

Domestic demand should continue to support economic growth this year. Private consumption will likely benefit from a lower tax burden and still-favorable financial conditions. New gas- and oil-related projects are expected to boost fixed investment growth. On the other hand, regional tensions remain a key downside risk and cloud the outlook. FocusEconomics Consensus Forecast panelists forecast economic growth to moderate to 3.2% in 2019, which is unchanged from last month’s forecast. In 2020, our panel sees the economy expanding 3.3%.

Israel Economy Data

20132014201520162017
Population (million)8.18.28.48.58.7
GDP per capita (USD)36,01239,19136,78737,09241,541
GDP (USD bn)290322308317362
Economic Growth (GDP, annual variation in %)4.23.52.64.03.3
Consumption (annual variation in %)3.74.23.75.53.2
Investment (annual variation in %)3.60.8-0.811.92.7
Industrial Production (annual variation in %)0.51.22.21.73.7
Unemployment Rate6.35.95.34.84.2
Fiscal Balance (% of GDP)-3.1-2.7-2.1-2.1-2.0
Public Debt (% of GDP)66.065.362.660.759.1
Inflation Rate (CPI, annual variation in %, eop)1.8-0.2-1.0-0.20.4
Inflation Rate (CPI, annual variation in %)1.50.5-0.6-0.50.2
Policy Interest Rate (%)1.000.250.100.100.10
Exchange Rate (vs USD)3.473.893.903.853.47
Exchange Rate (vs USD, aop)3.613.583.893.843.60
Current Account (% of GDP)3.03.75.03.82.9
Current Account Balance (USD bn)8.711.915.512.010.5
Trade Balance (USD billion)-7.9-7.2-3.3-7.4-9.5
Exports (USD billion)62.463.556.756.258.0
Imports (USD billion)70.270.760.063.567.5
Exports (annual variation in %)2.21.9-10.8-0.93.3
Imports (annual variation in %)-0.20.7-15.25.96.3
International Reserves (USD)81.886.190.698.4113
External Debt (% of GDP)34.529.327.927.724.7

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Israel Facts

ValueChangeDate
Bond Yield2.14-1.69 %Feb 14
Exchange Rate3.66-0.37 %Feb 14
Stock Market1,419-0.91 %Feb 14

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