Israel Economic Forecast

Israel Economic Outlook

November 28, 2017

Annualized GDP growth accelerated in Q3, driven by strong private consumption and investment. Household spending grew at the fastest pace in more than a year, benefiting from a tight labor market and low inflation. Robust business confidence and low interest rates pushed firms to invest heavily for a second consecutive quarter. Despite stellar headline growth in exports, growth excluding diamond shipments and startups was tepid, no doubt hit by the stronger shekel. Leading indicators from October have been reassuring; economic activity ticked up on stronger inbound tourism, while consumer confidence hit an all-time high amid nearly full employment. Although the PMI declined for a second straight month in October, stronger imports of manufacturing inputs signaled the manufacturing sector’s underlying health.

Israel Economic Growth

Household spending is expected to drive economic growth next year, supported by the tight labor market and high asset values. The Bank of Israel’s loose monetary policy and the government’s medium-term infrastructure plans are expected to boost fixed investment. Downside risks will continue to include the possibility of flare-ups in Israeli-Palestinian tensions, which could halt the tourism sector’s recovery. Met the why particular panelists expect growth to reach 3.4% in 2018, which is unchanged from last month’s forecast. For 2019, our panel expects 3.2% growth.

Israel Economy Data

20122013201420152016
Population (million)7.98.18.28.48.5
GDP per capita (USD)32,15636,11439,23536,82737,204
GDP (USD bn)254291322308318
Economic Growth (GDP, annual variation in %)2.44.43.22.64.0
Consumption (annual variation in %)3.13.74.14.05.4
Investment (annual variation in %)3.54.50.00.111.3
Industrial Production (annual variation in %)4.00.51.22.21.7
Unemployment Rate6.86.35.95.34.8
Fiscal Balance (% of GDP)-3.9-3.1-2.7-2.1-2.1
Public Debt (% of GDP)67.165.865.262.660.5
Inflation Rate (CPI, annual variation in %, eop)1.61.8-0.2-1.0-0.2
Inflation Rate (CPI, annual variation in %)1.71.50.5-0.6-0.5
Policy Interest Rate (%)1.751.000.250.110.11
Exchange Rate (vs USD)3.733.473.893.903.85
Exchange Rate (vs USD, aop)3.863.613.583.893.84
Current Account (% of GDP)0.63.43.74.93.9
Current Account Balance (USD bn)1.69.811.915.212.4
Trade Balance (USD billion)-9.0-7.1-6.7-3.3-7.4
Exports (USD billion)61.363.063.856.756.2
Imports (USD billion)70.370.170.560.063.5
Exports (annual variation in %)-5.72.81.2-11.8-0.9
Imports (annual variation in %)-3.0-0.30.5-15.25.9
International Reserves (USD)75.981.886.190.698.4
External Debt (% of GDP)11.134.829.827.927.6

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Israel Facts

ValueChangeDate
Bond Yield1.97-1.69 %Dec 06
Exchange Rate3.51-0.37 %Dec 06
Stock Market1,318-0.91 %Dec 06

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