Israel Economic Forecast

Israel Economic Outlook

April 2, 2019

Growth appeared to dim slightly in the first quarter of the year. The unemployment rate ticked up in January and February in annual terms, while the manufacturing PMI was in negative territory in the same period amid lower purchasing activity by firms. That said, the economy remained on a firm footing; the labor market was still healthy despite the rise in unemployment, which should have buttressed consumer spending, while elevated business sentiment likely supported investment. This comes after growth accelerated in Q4 2018 in SAAR terms amid a pick-up in domestic demand. On the political front, the country is gearing up for elections on 9 April, with incumbent Benjamin Netanyahu and Benny Gantz, leader of the centrist Blue and White coalition, the favorites to become the next prime minister. Irrespective of the result, a notable shift in economic policy is unlikely.

Israel Economic Growth

The economy should expand at a robust pace this year, supported by loose fiscal policy, strong wage growth and healthy external demand for high-tech exports. Moreover, the development of the Leviathan gas field should boost investment. Regional geopolitical tensions and rising global trade protectionism pose downside risks to growth. Met the why particular analysts expect growth of 3.2% in 2019, which is unchanged from last month’s forecast, and 3.2% again in 2020.

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 Yield2.01-1.69 %Apr 11
Exchange Rate3.58-0.37 %Apr 12
Stock Market1,473-0.91 %Apr 12

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