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Middle East and North Africa
Israel |
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Last updated: 25 June 2009
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Country information
ECONOMY
Basic Economic Facts
Annual Growth: 4.1% in 2008
Inflation: 3.3% in 2008
Major Industries: Electronics, telecommunications, information technology, biotech, tourism, construction, diamonds, and agriculture
Major Trading Partners: USA and EU
Israel has developed a world-class reputation for technological research and development (particularly in electronics, biotechnology, and software). It also enjoys trading exports in cut diamonds, chemicals, and agricultural products.
Israel’s economy is in a relatively good situation despite the global financial crisis and the slowdown in the US. The overall performance of the economy in 2007 and in 2008 won plaudits from the World Bank and other leading economic institutions. The two major rating agencies gave Israel an ‘A’ rating and Israel is currently in the process of applying to join the OECD. Much of this is due to the high-tech sector, which continues to go from strength to strength, with growing international respect for Israeli innovation and technology.
Israel's gross domestic product (GDP) grew by 5.3% in 2007 and by a further 4.1% in 2008,but like the rest of the world began to slow down in the last quarter of 2008. The last three years have seen a 50% increase in the number of British tourists visiting Israel.
The 2008 budget totalled NIS314 billion. The government has set the budget for 2009 at NIS 245 billion, and for 2010 at NIS 231 billion. The cabinet has also decided to reduce the budget deficit gradually over the next six years. The approved deficit for the 2009-2010 period will be 6%, falling to 5.5% in 2010. Military spending and debt repayments remain the major items of budget spending. Thanks to a well-managed monetary policy, the Government only slightly missed its inflation target for 2008 of 2-3%.
Despite the strong underlying economy, the long-term outlook remains heavily dependent on developments in the conflict with the Palestinians and on political and security developments in the region.
