Israel Economic Forecast

Israel Economic Outlook

October 29, 2019

The economy appeared to gain steam in the third quarter. In July and August, growth in the State of the Economy index—a proxy for economic activity—averaged notably higher than in Q2. Moreover, the labor market should have remained tight as the unemployment rate tracked below 4.0% in July and August, while average wage growth markedly outpaced inflation in July, boding well for private consumption. This comes after a meek Q2: A third GDP estimate revised growth down to a mere 0.6% SAAR. However, this low figure was distorted by a sharp fall in vehicle sales, after consumers had front-loaded purchases in Q1 ahead of new environmental taxes, and underlying momentum was broadly stable. On the political front, the country remains without a new government following inconclusive elections in September. However, economic momentum should remain robust regardless.

Israel Economic Growth

Economic growth should be brisk next year, underpinned by loose monetary policy, strong population growth and the start of production at the Leviathan gas field, which should stimulate exports. Elevated global trade tensions, a large fiscal shortfall and volatile regional geopolitics pose downside risks. FocusEconomics analysts expect growth of 3.2% in 2020, which is unchanged from last month’s forecast, and 3.3% in 2021.

Israel Economy Data

20132014201520162017
Population (million)8.18.28.48.58.7
GDP per capita (USD)36,06539,39336,95737,28241,836
GDP (USD bn)291323310319364
Economic Growth (GDP, annual variation in %)4.33.92.54.03.4
Consumption (annual variation in %)3.84.13.95.83.3
Investment (annual variation in %)3.80.80.212.82.9
Industrial Production (annual variation in %)0.51.22.21.73.7
Unemployment Rate6.35.95.34.84.2
Fiscal Balance (% of GDP)-3.1-2.7-2.1-2.1-1.9
Public Debt (% of GDP)67.466.163.661.859.9
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)2.94.25.03.82.8
Current Account Balance (USD bn)8.413.715.612.110.2
Trade Balance (USD billion)-7.5-6.8-3.3-7.6-9.5
Exports (USD billion)63.164.257.256.359.0
Imports (USD billion)70.671.060.563.968.5
Exports (annual variation in %)3.41.8-10.9-1.64.9
Imports (annual variation in %)0.30.6-14.85.67.2
International Reserves (USD)81.886.190.698.4113
External Debt (% of GDP)34.429.127.827.424.3

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Israel Facts

ValueChangeDate
Bond Yield1.10-1.69 %Sep 04
Exchange Rate3.53-0.37 %Sep 04
Stock Market1,479-0.91 %Sep 04

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