Israel Economic Forecast

Israel Economic Outlook

July 2, 2019

The economy seemingly lost steam in the second quarter, after a frontloading of car purchases ahead of green tax changes boosted the first quarter’s outturn. The Central Bank’s State of the Economy Index suggests economic activity ebbed noticeably in April and May, likely in part on lower vehicle sales. A contraction in exports also played a role, amid a strong shekel and more challenging global trade environment. More positively, the labor market is in rude health: The unemployment rate dipped to a 14-month low in May, which should be supporting wage growth and domestic demand. In mid-June, GDP figures for Q1 were revised down slightly, largely on softer-than-previously-estimated expansions in private consumption, fixed investment and exports, and larger-than-estimated growth in imports. However, the overall picture was unchanged: Domestic demand powered the economy, while the external sector subtracted from growth.

Israel Economic Growth

Growth should be brisk this year, supported by the strong labor market. Moreover, the development of the Leviathan gas field should boost investment. Rising global trade uncertainty and geopolitical tensions pose downside risks to growth. FocusEconomics analysts expect growth of 3.3% in 2019, which is unchanged from last month’s forecast, and 3.3% again in 2020.

Israel Economy Data

Population (million)
GDP per capita (USD)36,06539,39336,95737,28241,836
GDP (USD bn)291323310319364
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Unemployment Rate6.
Fiscal Balance (% of GDP)-3.1-2.7-2.1-2.1-1.9
Public Debt (% of GDP)67.165.863.862.060.5
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 (%)
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)
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)
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-
International Reserves (USD)81.886.190.698.4113
External Debt (% of GDP)34.429.127.827.424.3

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Israel Facts

Bond Yield1.59-1.69 %Jul 11
Exchange Rate3.55-0.37 %Jul 11
Stock Market1,488-0.91 %Jul 11

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