Israel: Economy Overview

Israel has a technologically advanced market economy.

Economy Overview

Israel depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, its major source of economic and military aid. Israel's GDP, after contracting slightly in 2001 and 2002 due to the Palestinian conflict and troubles in the high-technology sector, grew about 5% per year from 2003-07. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals - following years of prudent fiscal policy and a series of liberalizing reforms - and a resilient banking sector, and the economy has rebounded quickly. Following GDP growth of 4% in 2008, Israel's GDP contracted 0.3% in 2009 but is expected to expand in 2010. The global economic downturn affected Israel's economy primarily through reduced demand for Israel's exports - which account for about 45% of the country's GDP - in the United States and EU, Israel's top trading partners. The Israeli Government responded to the recession by implementing a fiscal stimulus package and an aggressive expansionary monetary policy - including cutting interest rates to record lows, purchasing government bonds, and intervening in the foreign currency market.

GDP (purchasing power parity):

$205.2 billion (2009 est.)
country comparison to the world: 51
$205.9 billion (2008 est.)
$197.6 billion (2007 est.)
note: data are in 2009 US dollars

GDP (official exchange rate):

$215.7 billion (2009 est.)

GDP - real growth rate:

-0.3% (2009 est.)
country comparison to the world: 112
4.2% (2008 est.)
5.2% (2007 est.)

GDP - per capita (PPP):

$28,400 (2009 est.)
country comparison to the world: 48
$28,900 (2008 est.)
$28,300 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 2.6%
industry: 32%
services: 65.4% (2009 est.)

Labor force:

3.01 million(2009 est.)
country comparison to the world: 99

Labor force - by occupation:

agriculture: 2%
industry: 16%
services: 82% (30 September 2008)

Unemployment rate:

8% (2009 est.)
country comparison to the world: 87
6.1% (2008 est.)

Investment (gross fixed):

17.1% of GDP (2009 est.)
country comparison to the world: 125

Budget:

revenues: $54.1 billion
expenditures: $64.24 billion (2009 est.)

Inflation rate (consumer prices):

3.4% (2009 est.)
country comparison to the world: 105
4.6% (2008 est.)

Commercial bank prime lending rate:

6.06% (31 December 2008)
country comparison to the world: 130
6.27% (31 December 2007)

Stock of domestic credit:

$145.2 billion (31 December 2007)
country comparison to the world: 33
$113.4 billion (31 December 2006)

Agriculture - products:

citrus, vegetables, cotton; beef, poultry, dairy products

high-technology projects (including aviation, communications, computer-aided design and manufactures, medical electronics, fiber optics), wood and paper products, potash and phosphates, food, beverages, and tobacco, caustic soda, cement, construction, metals products, chemical products, plastics, diamond cutting, textiles, footwear

Industrial production growth rate:

-1.5% (2009 est.)
country comparison to the world: 84

Oil - production:

5,246 bbl/day (2008 est.)
country comparison to the world: 94

Natural gas - production:

1.19 billion cu m (2008 est.)
country comparison to the world: 62

Current account balance:

$5.465 billion (2009 est.)
country comparison to the world: 26
$1.596 billion (2008 est.)

Exports:

$44.35 billion (2009 est.)
country comparison to the world: 49
$60.83 billion (2008 est.)

Exports - commodities:

machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles and apparel

Exports - partners:

US 32.5%, Belgium 7.5%, Hong Kong 6.7% (2008)

Imports:

$47.4 billion (2009 est.)
country comparison to the world: 44
$67.66 billion (2008 est.)

Imports - commodities:

raw materials, military equipment, investment goods, rough diamonds, fuels, grain, consumer goods

Imports - partners:

US 12.3%, Belgium 6.5%, China 6.5%, Switzerland 6.1%, Germany 6% (2008)

Debt - external:

$84.69 billion (31 December 2009 est.)
country comparison to the world: 36
$86.08 billion (31 December 2008 est.)

Stock of direct foreign investment - at home:

$60.68 billion (31 December 2009 est.)
country comparison to the world: 46
$56.93 billion (31 December 2008 est.)

Stock of direct foreign investment - abroad:

$55.65 billion (31 December 2009 est.)
country comparison to the world: 29
$54.55 billion (31 December 2008 est.)

Source: CIA - The World Factbook