Israel Economic Forecast

Israel Economic Outlook

September 7, 2021

GDP expanded robustly in Q2 due to improvements in private consumption, public spending and fixed investment, amid the rollback of Covid-19 restrictions. Meanwhile, the expansions in exports and imports were broadly similar to Q1. Turning to Q3, the Composite State of the Economy Index expanded solidly in July. However, momentum has likely eased since then due to a surge in Covid-19 cases and the snapback of some restrictions: In August, the government reimposed limits on gatherings and made it compulsory to show proof of vaccination in order to enter public venues. Vaccine boosters are currently being rolled out in a bid to avoid tougher measures. In other news, the cabinet agreed on the 2021–2022 budget in early August, along with a set of fairly ambitious economic reforms. However, parliamentary approval is not guaranteed given the government’s wafer-thin majority.

Israel Economic Growth

The economy will grow strongly this year thanks to the successful vaccination campaign and recoveries abroad. Improving relations with Arab neighbors also bode well for activity. Downside risks include possible infighting within the governing coalition, further conflict with Palestine and the potential for additional restrictions if Covid-19 cases stay elevated. FocusEconomics analysts see the economy expanding 5.3% in 2021, up 0.5 percentage points from last month’s forecast, before growing 4.2% in 2022.

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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