Israel

Economics, Political, and Trade Overview

Source: Feb 10, 2022 Economist Intelligence Unit

Israel - In Short.

Overview of Israel

Israel has emerged as a regional economic and military powerhouse, leveraging its booming high-tech sector, massive defense industry, and concerns about Iran to foster partnerships around the world, even with some of its former foes. The State of Israel was declared in 1948, after Britain withdrew from its mandate of Palestine. The UN proposed partitioning the area into Arab and Jewish states, and Arab armies that rejected the UN plan were defeated. Israel was admitted as a member of the UN in 1949 and saw rapid population growth, primarily due to migration from Europe and the Middle East, over the following years. Israel fought wars against its Arab neighbors in 1967 and 1973, followed by peace treaties with Egypt in 1979 and Jordan in 1994. Israel took control of the West Bank and Gaza Strip in the 1967 war, and subsequently administered those territories through military authorities. Israel and Palestinian officials signed a number of interim agreements in the 1990s that created an interim period of Palestinian self-rule in the West Bank and Gaza. Israel withdrew from Gaza in 2005. While the most recent formal efforts to negotiate final status issues occurred in 2013-2014, the US continues its efforts to advance peace. Immigration to Israel continues, with more than20,000 new immigrants, mostly Jewish, in 2020. The Israeli economy has undergone a dramatic transformation in the last 25 years, led by cutting-edge, high-tech sectors. Offshore gas discoveries in the Mediterranean, most notably in the Tamar and Leviathan gas fields, place Israel at the center of a potential regional natural gas market. However, longer-term structural issues such as low labor force participation among minority populations, low workforce productivity, high costs for housing and consumer staples, and a lack of competition, remain a concern for many Israelis and an important consideration for Israeli politicians. Former Prime Minister Benjamin NETANYAHU dominated Israel’s political landscape from 2009 to June 2021, becoming Israel’s longest serving prime minister before he was unseated by Naftali BENNETT, after Israel’s fourth election in two years. BENNETT formed the most ideologically diverse coalition in Israel’s history, including the participation of an Arab-Israeli party. Under the terms of the coalition agreement, BENNETT would remain as prime minister until August 2023, then Alternate Prime Minister and Foreign Minister Yair LAPID would succeed him. Israel signed normalization agreements – brokered by the US – with Bahrain, the United Arab Emirates, and Morocco in late 2020 and with Sudan in early 2021.
Value
Country Full Name
Israel
Country Code
ISR
Region
Middle East & North Africa
Income Group
High income
Currency Unit
GDP
4.07E+11
Population
9215100
Land Area
21640
Net National Income Per Capita
37538.06694
GDP per Capita (PPP)
39489.28078

2020 GDP Growth Rate (Current USD)

2020 GDP Per Capita (Current USD)

2020 Urbanization Rate (%)

2020 Total Fertility Rate (Birth Per Woman)

Doing Business Score (100= Most Friendly)

Israel - Economic

Economy of Israel

Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.   Since March 2020, economic growth has slowed compared to recent historical averages, but Israel’s slump has been less severe than in other Middle Eastern countries because of its swift vaccine roll-out and diversified economic base. Between 2016 and 2019, growth averaged 3.6% per year, led by exports. Israel’s new government is hoping to pass the country’s first budget in two years, which, combined with prudent fiscal policy and strong global trade ties would probably enable Israel to recover from economic challenges caused by the COVID-19 pandemic.   Natural gas fields discovered off Israel’s coast since 2009 have brightened Israel’s energy security outlook. The Tamar and Leviathan fields were some of the world’s largest offshore natural gas finds in the last decade. In 2020, Israel began exporting gas to Egypt and Jordan.   Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel’s income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of “tycoons” have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high. Private consumption is expected to drive growth through 2021, with consumers benefitting from low inflation and a strong currency.   In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments – the ultraorthodox and Arab-Israeli communities. Also, Israel’s progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services – sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.

Unemployment Rate

Inflation Rate

Israel - GDP Composition

GDP Composiiton & Value Added of Israel

Last Updated: Jan, 2021, Updated For 2020.

Israel - GDP, Value Added

Demographics of Israel

population concentrated in and around Tel-Aviv, as well as around the Sea of Galilee; the south remains sparsely populated with the exception of the shore of the Gulf of Aqaba
Geographic Location

Middle East, bordering the Mediterranean Sea, between Egypt and Lebanon

Races

Jewish 74.1% (of which Israel-born 78.1%, Europe/America/Oceania-born 15.2%, Africa-born 4.3%, Asia-born 2.4%), Arab 21%, other 4.9% (2019 est.)

Languages

Hebrew (official), Arabic (special status under Israeli law), English (most commonly used foreign language)major-language

Religion

Jewish 74%, Muslim 18%, Christian 1.9%, Druze 1.6%, other 4.5% (2020 est.)

Dependency & Expectancy of Israel

Last Updated: Jan, 2021

Dependency Ratio

Expectancy

Politics & Policies of Israel

2021 Policies Overview

Updated Coming in March 2021 after our team finish summarizing countries policy.

International Organizations

BIS, BSEC (observer), CE (observer), CERN, CICA, EBRD, FAO, IADB, IAEA, IBRD, ICAO, ICC (national committees), ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC (NGOs), MIGA, OAS (observer), OECD, OPCW (signatory), OSCE (partner), Pacific Alliance (observer), Paris Club, PCA, SELEC (observer), UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO

Import of Israel

Export of Israel

Import Destination

Export Destination