Israel Economic Forecast

Israel Economic Outlook

March 10, 2020

The economy expanded strongly in the fourth quarter of last year according to recent data, although the figures were flattered by a front-loading of vehicle purchases distorting consumption and investment. Underlying momentum was more modest, albeit still solid. Turning to 2020, economic growth is likely ebbing in the first quarter. While economic activity growth was robust in January according to the Central Bank’s State of the Economic Index, the manufacturing PMI dipped in the same month on lower export demand, while fiscal policy has turned contractionary due to the lack of an approved 2020 budget. Moreover, a likely drop-off in vehicle sales could artificially depress Q1’s headline GDP reading. In politics, the March elections yielded an inconclusive result, with neither the right- nor left-wing blocs securing a majority in the Knesset. This could spell further political paralysis going forward.

Israel Economic Growth

The economy should perform fairly well this year notwithstanding the current lack of a government, underpinned by a healthy labor market, population growth and gas exports from the new Leviathan field. However, global trade tensions, volatile regional geopolitics and the coronavirus outbreak pose downside risks. FocusEconomics analysts estimate growth of 3.1% in 2020, which is unchanged from last month’s forecast, and 3.3% in 2021.

Israel Economy Data

2014 2015 2016 2017 2018
Population (million)
GDP per capita (USD)39,39335,79037,35040,56341,674
GDP (USD bn)323300319353370
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)
Unemployment Rate5.
Fiscal Balance (% of GDP)-2.7-2.1-2.1-2.0-2.9
Public Debt (% of GDP)66.163.861.859.960.4
Inflation Rate (CPI, annual variation in %, eop)-0.2-1.0-
Inflation Rate (CPI, annual variation in %)0.5-0.6-
Policy Interest Rate (%)
Exchange Rate (vs USD)3.893.903.853.473.75
Exchange Rate (vs USD, aop)3.583.893.843.603.60
Current Account (% of GDP)
Current Account Balance (USD bn)13.715.511.48.39.5
Trade Balance (USD billion)-6.8-3.4-8.3-11.4-18.3
Exports (USD billion)
Imports (USD billion)71.060.563.968.577.1
Exports (annual variation in %)1.8-9.6-
Imports (annual variation in %)0.6-
International Reserves (USD)86.190.698.4113115
External Debt (% of GDP)29.128.727.325.125.3

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Israel Facts

Value Change Date
Bond Yield0.98-1.69 %Jan 01
Exchange Rate3.46-0.37 %Dec 31

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