Economic Growth in Israel
Israel's economy recorded an average growth rate of 3.5% in the decade to 2024, compared to the 2.1% average for Middle East & North Africa. In 2024, real GDP growth was 0.7%. For more GDP information, visit our dedicated page.
Israel GDP Chart
Note: This chart displays Economic Growth (GDP, annual variation in %) for Israel from 2024 to 2023.
Source: Macrobond.
Israel GDP Data
2020 | 2021 | 2022 | 2023 | 2024 | |
---|---|---|---|---|---|
Economic Growth (Real GDP, ann. var. %) | -1.8 | 9.4 | 6.1 | 1.7 | 0.7 |
GDP (USD bn) | 411 | 490 | 525 | 509 | 540 |
GDP (ILS bn) | 1,414 | 1,582 | 1,764 | 1,878 | 1,998 |
Economic Growth (Nominal GDP, ann. var. %) | -1.0 | 11.9 | 11.5 | 6.5 | 6.4 |
Economic growth gains traction in Q1
GDP reading: GDP growth gathered pace to 3.4% in seasonally adjusted annualized rate terms (SAAR) in the first quarter from 1.9% in the fourth quarter of last year. Q1’s reading was broadly in line with market expectations; as a result, Israel’s economy finally recovered its pre-war level in Q1. On an annual basis, economic growth slowed markedly to 1.4% in Q1, compared to the previous quarter's 7.2% expansion.
Expenditure drivers see disparate performance: Private consumption contracted 5.0% in Q1, marking the worst result since Q4 2023 (Q4 2024: +4.1% SAAR). That said, the fall was partly due to consumers bringing forward vehicle purchases to Q4 ahead of tax changes at the outset of this year. Public consumption dropped 0.2% in Q1 (Q4 2024: +8.8% SAAR) on lower defense spending, while fixed investment growth improved moderately to 8.7% in Q1, following the 8.6% increase in the previous quarter. Exports of goods and services contracted 1.8% in Q1 (Q4 2024: +10.4% SAAR), while imports of goods and services growth slowed to 5.0% in Q1 (Q4 2024: +16.0% SAAR).
GDP outlook: The economy should continue to grow at a robust pace in the coming quarters, though the recent expansion of the offensive in Gaza could cap GDP by restricting labor supply.
Panelist insight: Digging deeper into the data, Goldman Sachs analysts said: “The expenditure breakdown of the print points to a sharp recovery in investment, in particular construction spending, which rose by +44.9%qoq annl. We have previously flagged weakness in construction as the main driver of the slower-than-expected recovery in Israeli GDP since October 7, reflecting the lack of construction workers following widespread conscription and the sharp decline in Palestinian guest workers. However, employment in construction has recovered close to pre-October 7 levels, which likely contributed to the strength in this category of GDP.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Israeli GDP projections for the next ten years from a panel of 23 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Israeli GDP.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Israeli GDP projections.
Want to get access to the full dataset of Israeli GDP forecasts? Send an email to info@focus-economics.com.
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