Israel Economic Forecast

Israel Economic Outlook

May 10, 2022

After accelerating in Q4, economic momentum appeared to wane somewhat in Q1, in part due to a challenging base of comparison. The Composite State of the Economy index recorded only mild growth in the period, while the manufacturing PMI averaged in contractionary territory in Q1 amid weak export demand. However, the unemployment rate continued to fall throughout the quarter, which, together with the removal of vaccine pass requirements, should have supported consumption. Moreover, visitor arrivals roared back through March in line with easing travel restrictions. In politics, pressure on the government is rising because of a recent surge in violence and the loss of its parliamentary majority in April following the defection of an MP. As a result, the risk of snap elections has risen. That said, economic growth is unlikely to be knocked notably off course.

Israel Economic Growth

Growth should be rapid this year, sustained by recovering tourism, a booming tech scene and improving relations with Gulf neighbors. The most recent example of strengthening ties came in April with the announcement of a trade deal with the UAE covering 95% of tradable products. However, higher inflation due to the Russia-Ukraine war and social unrest at home are risks. FocusEconomics analysts see the economy expanding 5.1% in 2022, which is unchanged from last month’s forecast, before growing 3.6% in 2023.

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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