Israel Economic Forecast

Israel Economic Outlook

November 30, 2021

The economy lost steam in Q3, amid a surge in Covid-19 cases and the consequent tightening of restrictions. Looking at subsectors, private consumption growth slowed notably, while public spending slipped into contraction and fixed investment accelerated. However, the overall GDP slowdown was exaggerated by the effect of lower taxes on car imports—a factor which frequently distorts Israel’s national accounts figures. Turning to Q4, October’s Composite State of the Economy Index reading suggests activity is accelerating, with the services sector likely benefiting from tumbling Covid-19 cases as the vaccine booster campaign has been rolled out. However, the sudden border closure in November will be hitting tourism. In politics, the government approved the 2021 and 2022 budgets in November, averting snap elections. The budgets also contain structural reforms with the potential to boost future growth.

Israel Economic Growth

The economy will grow briskly next year, supported by a recovery in tourism, improved economic ties with Gulf neighbors and a booming tech scene. Downside risks include the fractured nature of the coalition government—which could provoke political instability—as well as further conflict with Palestine and further virus mutations. FocusEconomics analysts see the economy expanding 4.5% in 2022, which is up 0.1 percentage points from last month’s forecast, before growing 3.7% in 2023.

Israel Economy Data

2015 2016 2017 2018 2019
Population (million)
GDP per capita (USD)35,79037,35040,56341,67443,658
GDP (USD bn)300319353370395
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Unemployment Rate5.
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-
Inflation Rate (CPI, annual variation in %)-0.6-
Policy Interest Rate (%)
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)
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-
Imports (annual variation in %)-
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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