Israel Economic Forecast

Israel Economic Outlook

July 3, 2018

A second release of Q1 GDP data shows that the economy grew at a quicker pace than previously estimated, driven by a strong domestic economy—especially private consumption—that offset a weak external sector. Looking at Q2, industrial production expanded robustly in April, and the monthly state of the economy index remained resilient through May. On a less positive note, activity in the manufacturing sector contracted in May on weakening domestic demand, and merchandise exports declined sharply on lower foreign demand for high-tech goods. Against this backdrop, the government is reportedly planning to loosen oil drilling restrictions in the leadup to the next round of license auctions in October–November. Restrictions that are likely to be lifted include the amount that can be exported and the need to supply the domestic market. The move could boost energy exports in the medium-term. However, disputes with Cyprus and Lebanon over extraction rights remain.

Israel Economic Growth

Domestic demand is expected to propel economic growth this year, which FocusEconomics Consensus Forecast panelists see at 3.4%, unchanged from last month’s forecast. New gas- and oil-related projects should buttress fixed investment growth, which should further benefit from ultra-loose monetary policy. Household consumption will likely benefit from a lower tax burden. Downside risks are present in regional tensions that could drag on inbound tourism, investor sentiment and export growth. Next year, FocusEconomics panelists forecast the economy will expand 3.2%.

Israel Economy Data

20132014201520162017
Population (million)8.18.28.48.58.7
GDP per capita (USD)36,01239,19136,78737,09241,541
GDP (USD bn)290322308317362
Economic Growth (GDP, annual variation in %)4.23.52.64.03.3
Consumption (annual variation in %)3.74.23.75.53.2
Investment (annual variation in %)3.60.8-0.811.92.7
Industrial Production (annual variation in %)0.51.22.21.73.7
Unemployment Rate6.35.95.34.84.2
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 (%)1.000.250.100.100.10
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)3.03.75.03.82.9
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 %)-0.20.7-15.25.96.3
International Reserves (USD)81.886.190.698.4113
External Debt (% of GDP)34.529.327.927.724.7

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Israel Facts

ValueChangeDate
Bond Yield2.18-1.69 %Jul 12
Exchange Rate3.64-0.37 %Jul 13
Stock Market1,386-0.91 %Jul 13

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