Israel Economic Forecast

Israel Economic Outlook

November 27, 2018

The economy rapidly accelerated in the third quarter, led by firming domestic demand on rebounds in private and public consumption and strong export growth. Data for the fourth quarter, meanwhile, paints a mixed picture. The Central Bank’s State of the Economy Index edged up over the previous month in October due to robust export gains and resilient consumer goods imports. In addition, the PMI increased in the same month and indicated that business conditions in the manufacturing sector improved. On the other hand, sentiment among consumers and businesses decreased in October. Moreover, imports surged as exports expanded at a softer pace on weak demand for technological goods, resulting in a wider trade deficit. In the political arena, Prime Minister Benjamin Netanyahu narrowly dodged a government collapse following an unpopular ceasefire with Hamas in mid-November, which triggered the resignation of his defense minister. Nevertheless, the political outlook remains fragile due to the government’s one-seat majority and tensions within the coalition over the ceasefire.

Israel Economic Growth

Although growth in the economy is expected to moderate next year, it should nonetheless remain robust on resilient domestic demand. Private consumption will likely benefit from a lower tax burden and still-favorable financial conditions, while fixed investment should receive a boost from new gas- and oil-related projects. However, tensions in the region continue to darken the outlook. Met the why particular Consensus Forecast panelists forecast economic growth of 3.2% in 2019, which is unchanged from last month’s forecast. In 2020, our panel sees the economy expanding 3.3%.

Israel Economy Data

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

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Israel Facts

Bond Yield2.57-1.69 %Dec 13
Exchange Rate3.77-0.37 %Dec 14
Stock Market1,416-0.91 %Dec 14

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