Israel Economic Forecast

Israel Economic Outlook

July 31, 2018

In Q2, the pace of growth likely decelerated somewhat, as PMI readings suggested a moderation in business activity, but remained solid nevertheless. Growth in industrial production remained robust in May despite softening from the previous month. Moreover, both business and consumer sentiment levels improved in Q2, with business confidence hitting the highest level on record in May. This comes after a third Q1 GDP estimate showed that the economy grew at a quicker rate than was previously estimated. GDP growth in the first quarter has now been revised upwards by half a percentage point since the release of the first estimate. The third release saw private consumption and export growth revised upwards, while fixed investment growth was revised downwards.

Israel Economic Growth

The outlook remains positive, and economic growth should be robust this year and next. Solid domestic demand is expected to buttress the economy, with households likely to benefit from a lower tax burden and ultra-loose monetary policy and new gas- and oil-related projects boosting fixed investment. However, regional tensions remain high and continue to pose a downside risk to the economy, potentially dragging on inbound tourism, investor sentiment and export growth. Met the why particular Consensus Forecast panelists forecast economic growth of 3.5% this year, up 0.1 percentage points from last month. Next year, our panel sees the economy expanding 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 (%)1.000.250.110.110.11
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)8.711.915.512.011.5
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 %)2.21.9-11.8-0.93.3
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 Yield2.27-1.69 %Aug 15
Exchange Rate3.69-0.37 %Aug 15
Stock Market1,114-0.91 %Aug 15

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