Economic Growth in Israel
The Israeli economy recorded an average growth rate of 4.2% in the decade to 2022, above the 2.0% average for the Middle East & North Africa region. In 2022, the real GDP growth was 6.4%. For more GDP information, visit our dedicated page.
Israel GDP Chart
Note: This chart displays Economic Growth (GDP, annual variation in %) for Israel from 2014 to 2023.
Source: Macrobond.
Israel GDP Data
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
Economic Growth (GDP, ann. var. %) | 3.8 | -1.4 | 9.4 | 6.2 | 1.9 |
GDP (USD bn) | 401 | 414 | 493 | 528 | 511 |
GDP (ILS bn) | 1,429 | 1,422 | 1,591 | 1,773 | 1,884 |
Economic Growth (Nominal GDP, ann. var. %) | 5.8 | -0.5 | 11.9 | 11.4 | 6.2 |
GDP growth accelerates in Q3
Despite acceleration, conflict continues to hamper activity: GDP growth sped up to 3.8% in seasonally adjusted annualized rate terms (SAAR) in the third quarter from 0.3% in the second quarter, exceeding market expectations. However, the economy was still around 1% below its pre-war size. On an annual basis, economic activity contracted 1.0% in Q3, following the previous period's 2.7% fall.
Broad-based expansion: Private consumption increased 8.6% in the third quarter, which was below the second quarter's 13.2% expansion. Public consumption contracted 10.8% (Q2: -0.4% SAAR). Meanwhile, fixed investment growth accelerated to 21.8% in Q3, following the 8.5% increase recorded in the prior quarter. Exports of goods and services increased 1.7% on a SAAR basis in the third quarter, which contrasted with the second quarter's 7.1% contraction. In addition, imports of goods and services grew 9.8% in Q3 (Q2: -8.3% SAAR).
Muted outlook: GDP growth is likely to ebb slightly in Q4 from Q3 due to the negative impact of the flare-up in conflict with Hezbollah, though the economy is still set to roughly regain the size it had before war broke out.
Panelist insight: On the outlook, EIU analysts said: “Given the impact of the Israel-Hizbullah conflict on economic activity in the fourth quarter of the year, we maintain our estimate that the economy will have stagnated overall in 2024. As the security situation improves from early 2025, we expect economic conditions to normalise more fully in that year, although relatively sluggish global demand growth will limit the extent of recovery.” Looking at the broader macroeconomic picture since the war began, Goldman Sachs analysts said: “Strong consumption is being offset by contracting investment, especially in construction – which has fallen by 20.1% in the past year. Construction spending has been held back by a combination of the uncertainty created by the conflict and a large labour supply constraint that has particularly affected the construction sector (owing to Israel’s labour force losing access to citizens on active military duty and non-resident workers from Gaza and the West Bank).In addition to declining investment, weaker exports have also weighed on Israeli growth.”
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 19 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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