Israel Economic Forecast

Israel Economic Outlook

June 4, 2019

The economy surged in the first quarter of the year. Although this was partly on a frontloading of vehicle purchases ahead of fiscal changes on 1 April, underlying growth was still solid, buoyed by a healthy labor market and a stronger external sector. Turning to the second quarter, available indicators point to a fairly robust start, notwithstanding external weakness. In April, growth in the Composite State of the Economy Index ticked up, while business and consumer sentiment improved; however, merchandise exports plummeted in the same month, which also fed through to a lower manufacturing PMI reading. In the political arena, MPs voted to dissolve Parliament on 29 May, triggering fresh elections for September, after incumbent Prime Minister Benjamin Netanyahu failed to form a coalition government. While this increases political uncertainty, the economic fallout should be limited.

Israel Economic Growth

Growth should be sprightly this year, supported by the strong labor market, fairly loose fiscal policy and healthy external demand for high-tech service exports. Moreover, the development of the Leviathan gas field should boost investment. Rising global trade protectionism and geopolitical tensions pose downside risks to growth. Met the why particular analysts expect growth of 3.3% in 2019, which is up 0.1 percentage points from last month’s forecast, and 3.4% in 2020.

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 Yield1.74-1.69 %Jun 13
Exchange Rate3.59-0.37 %Jun 13
Stock Market1,447-0.91 %Jun 13

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