Israel

Israel Economic Forecast

Israel Economic Outlook

GDP grew 3.0% in seasonally adjusted annualized terms in Q2, roughly double the OECD average, despite widespread protests and investor jitters over the government’s attempt to weaken the Supreme Court. Strong private and government spending drove the reading, with the former likely linked to lower inflation and unemployment and strong population growth. In contrast, exports and fixed investment declined, with tech investment falling particularly sharply. Turning to Q3, our panelists see another robust economic expansion, which should be spearheaded by strong consumer spending. However, Parliament’s recent approval of the first part of the judicial reform could be tempering investment. Looking at available data, employment and economic activity rose month on month in July, though operating conditions in the manufacturing sector deteriorated on declining export orders.

Israel Inflation

Inflation came in at 3.3% in July, down from June’s 4.2% and the weakest rate since January 2022. That said, inflation was still above the Central Bank’s 1.0–3.0% target range. Inflation is forecast to average slightly above its July level in the remainder of the year, propped up by substantial currency weakening in recent months and the uptick in oil prices so far in H2.

This chart displays Economic Growth (GDP, annual variation in %) for Israel from 2013 to 2022.

Israel Economic Data

2018 2019 2020 2021 2022
Population (million) 8.9 9.1 9.2 9.4 9.6
GDP (USD bn) 375 400 412 490 525
GDP per capita (USD) 42,198 44,169 44,733 52,276 54,963
GDP (ILS bn) 1,347 1,425 1,417 1,582 1,764
Economic Growth (Nominal GDP, ann. var. %) 4.8 5.8 -0.5 11.6 11.5
Economic Growth (GDP, ann. var. %) 4.2 3.8 -1.4 9.3 6.4
Domestic Demand (ann. var. %) 4.7 4.1 -3.1 11.1 7.5
Private Consumption (ann. var. %) 3.6 4.0 -7.4 11.4 7.5
Government Consumption (ann. var. %) 3.9 2.9 2.7 5.2 0.0
Fixed Investment (ann. var. %) 7.7 3.7 -3.1 13.5 10.4
Exports (G&S, ann. var. %) 5.7 2.9 -2.5 14.8 8.5
Imports (G&S, ann. var. %) 7.3 3.8 -8.0 21.2 12.1
Industrial Production (ann. var. %) 3.5 2.9 6.3 5.9 15.0
Unemployment (% of active population, eop) 4.2 3.6 4.8 4.0 4.2
Unemployment (% of active population, aop) 4.0 3.8 4.3 5.0 3.8
Fiscal Balance (% of GDP) -2.9 -3.7 -11.3 -4.3 0.6
Public Debt (% of GDP) 59.6 58.9 71.0 67.5 59.9
Money (ann. var. of M2 %) 4.6 4.4 17.6 19.9 12.7
Inflation (CPI, ann. var. %, eop) 0.8 0.6 -0.7 2.8 5.3
Inflation (CPI, ann. var. %, aop) 0.8 0.8 -0.6 1.5 4.4
Inflation (WPI, ann. var. %, eop) 1.4 -1.2 -4.3 11.0 9.0
BOI Interest Rate (%, eop) 0.25 0.25 0.10 0.10 3.25
10-Year Bond Yield (%, eop) 2.27 0.96 0.77 1.28 3.58
Exchange Rate (ILS per USD, eop) 3.74 3.45 3.21 3.11 3.53
Exchange Rate (ILS per USD, aop) 3.60 3.56 3.44 3.23 3.36
Current Account Balance (USD bn) 11.2 13.6 20.0 19.4 20.6
Current Account Balance (% of GDP) 3.0 3.4 4.9 4.0 3.9
Merchandise Trade Balance (USD bn) -16.7 -15.3 -11.4 -21.7 -26.1
Merchandise Exports (USD bn) 60.2 60.4 59.1 69.8 79.9
Merchandise Imports (USD bn) 76.9 75.7 70.5 91.4 106.0
Merchandise Exports (ann. var. %) 3.4 0.3 -2.1 18.0 14.5
Merchandise Imports (ann. var. %) 12.2 -1.6 -6.8 29.6 16.0
Foreign Direct Investment (USD bn) 21.5 17.4 23.1 21.5 27.8
International Reserves (USD bn) 115 126 173 213 194
International Reserves (months of imports) 18.0 20.0 29.5 28.0 22.0
External Debt (USD bn) 94.3 103.2 129.9 160.3 155.9
External Debt (% of GDP) 25.2 25.8 31.5 32.7 29.7

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