Israel Economic Forecast

Israel Economic Outlook

July 7, 2020

The economy appeared to contract far more sharply in the second quarter after shrinking at a record rate in the first quarter. The State of the Economy Index plummeted in April and May, with May’s reading marking a historic decline. Moreover, merchandise exports tanked in the same period on lockdowns abroad, while the manufacturing PMI was deep in contractionary territory through May. While the lifting of many social distancing restrictions and sizeable fiscal stimulus should have helped the economy recover somewhat in June, at the end of the month and in early July the government had to reimpose some measures due to a second wave of coronavirus cases. This will hamper activity heading into Q3.

Israel Economic Growth

The economy will shrink this year due to softer domestic and external demand. However, monetary and fiscal stimulus should provide some support. Downside risks include volatile regional geopolitics—particularly following Israel’s plans to occupy parts of the West Bank—and a further worsening of the Covid-19 outbreak, which could necessitate renewed restrictions. FocusEconomics analysts estimate the economy shrinking 5.0% in 2020, which is down 1.0 percentage point from last month’s forecast, before growing 4.6% in 2021.

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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