Israel Economic Forecast

Israel Economic Outlook

February 6, 2018

Robust leading data for the fourth quarter suggests that last year’s momentum continued in the October–December period; survey data through December showed both consumer and business confidence hovering near their respective all-time highs, while economic activity trended higher in the closing months of last year. Notwithstanding, initial estimates for annualized economic growth in the third quarter were revised downwards as household spending and fixed investment both came up short against early projections. The most significant revisions, however, were left for the external sector as export growth in the quarter was slashed and import growth was revised higher.

Israel Economic Growth

Fiscal policy will get even more accommodative this year, with the 2018–19 state budget set to increase spending and reduce taxes in an effort to support economic growth. Moreover, ultra-loose monetary policy will keep interest rates low and incentivize investment. Household spending will benefit from near-full employment and resilient asset values, while an improving global economy should sustain last year’s robust growth in exports. That said, a flaring-up of Israeli-Palestinian tensions could upend economic sentiment and threaten inbound tourism. FocusEconomics panelists expect GDP growth of 3.3% in 2018, down 0.1 percentage points from last month’s estimate, and 3.2% in 2019.

Israel Economy Data

20122013201420152016
Population (million)7.98.18.28.48.5
GDP per capita (USD)32,15636,11439,23536,82737,204
GDP (USD bn)254291322308318
Economic Growth (GDP, annual variation in %)2.44.43.22.64.0
Consumption (annual variation in %)3.13.74.14.05.4
Investment (annual variation in %)3.54.50.00.110.3
Industrial Production (annual variation in %)4.00.51.22.21.7
Unemployment Rate6.86.35.95.34.8
Fiscal Balance (% of GDP)-3.9-3.1-2.7-2.1-2.1
Public Debt (% of GDP)67.165.865.262.660.5
Inflation Rate (CPI, annual variation in %, eop)1.61.8-0.2-1.0-0.2
Inflation Rate (CPI, annual variation in %)1.71.50.5-0.6-0.5
Policy Interest Rate (%)1.751.000.250.100.10
Exchange Rate (vs USD)3.733.473.893.903.85
Exchange Rate (vs USD, aop)3.863.613.583.893.84
Current Account (% of GDP)0.63.43.74.93.9
Current Account Balance (USD bn)1.69.811.915.212.4
Trade Balance (USD billion)-9.0-7.1-6.7-3.3-7.4
Exports (USD billion)61.363.063.856.756.2
Imports (USD billion)70.370.170.560.063.5
Exports (annual variation in %)-5.72.81.2-10.8-0.9
Imports (annual variation in %)-3.0-0.30.5-15.25.9
International Reserves (USD)75.981.886.190.698.4
External Debt (% of GDP)40.134.829.827.927.6

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Israel Facts

ValueChangeDate
Bond Yield2.11-1.69 %Feb 22
Exchange Rate3.50-0.37 %Feb 22
Stock Market1,362-0.91 %Feb 22

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