Israel Economic Forecast

Israel Economic Outlook

May 7, 2019

The economy likely lost some momentum in annual terms in the first quarter, with the manufacturing PMI averaging notably lower than in Q4. Nevertheless, growth should still have been solid, supported by the expansionary fiscal stance and a healthy labor market. The State of the Economy Index recorded solid readings throughout Q1, while business confidence was robust. On the political front, incumbent Benjamin Netanyahu’s Likud party and rival Benny Gantz’s Blue and White coalition both obtained 35 seats in parliament in a general election held on 9 April. Agreements with smaller parties should give Netanyahu a majority, although coalition talks are still ongoing. Economic policy is thus unlikely to change significantly, with a continued focus on keeping taxes low and boosting competitiveness. However, political instability is possible given the fractured parliamentary arithmetic.

Israel Economic Growth

Growth should be sprightly this year, supported by loose fiscal policy, strong wage growth and healthy external demand for high-tech exports. Moreover, the development of the Leviathan gas field should boost investment. Geopolitical tensions—particularly with Gaza following recent conflict—and rising trade protectionism pose downside risks to growth. FocusEconomics analysts expect growth of 3.2% in 2019, which is unchanged from last month’s forecast, and 3.4% in 2020.

Israel Economy Data

Population (million)
GDP per capita (USD)36,01239,19136,78737,09241,541
GDP (USD bn)290322308317362
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)3.60.8-0.811.92.7
Industrial Production (annual variation in %)
Unemployment Rate6.
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 (%)
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)8.711.915.512.010.5
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-
International Reserves (USD)81.886.190.698.4113
External Debt (% of GDP)34.529.327.927.724.7

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Israel Facts

Bond Yield2.00-1.69 %May 13
Exchange Rate3.57-0.37 %May 13
Stock Market1,420-0.91 %May 13

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