Economic trends
After slowing in 2009 as a result of the global economic crisis, growth resumed in 2010 (4.2%) and 2011 (4.7%), driven by a dynamic private consumption, a high level of investment in companies and an increase in R&D and exports. Due to the slowdown in consumption and a lower external demand, growth should decrease to below 3% in 2012.
The economic fundamentals of Israel, which joined the OECD in 2010, are solid. In September 2011, the rating agency Standard & Poor's raised the rating of the country's long-term debt, taking into account future production of gas fields. But vulnerabilities exist: public debt is high compared with other emerging countries, defense spending reduces the tax maneuvering space, the economy is very dependent on exports to Europe and the United States, there is a lack of university graduates and property prices are soaring. In response to the protest movement that erupted in 2011, the government announced a fiscal package financed by tax increases and cuts in the military budget. In response to the eurozone crisis, the central bank lowered its interest rates. The security issue, given the instability in the Arab world, and tensions with Iran, remain at the forefront.
Israel enjoys one of the highest standards of living in the area and the average salary is at a close level to the European average. However, 25% of Israelis live in poverty and inequalities are strong, which explains the reasons of the social revolt against price increase, which erupted in 2011. The unemployment rate experienced a rise in connection to the global crisis, but decreased again to 5.6% in 2011. As the IMF has stressed, Israel should confront the problem of social and economic integration of the Arab and Haredi minority.
Main branches of industry
Israel has a diversified and technologically advanced economy. The agricultural sector employs 2% of the population and the country's main crops are fruits and vegetables, cereals, wine and cattle farming. The country is self-sufficient in food production, with the exception of cereals.
The fields of excellence of the Israeli industry are chemical products (Israel specializes in generic medicines), plastics engineering and high technologies. The companies, particularly those of the state-of-the-art technology, have profited from the collection of funds arriving from Wall Street and other financial centers of the world. As a fact, Israel classifies second, after Canada, for the number of companies registered in the American stock market. The state-of-the-art technologies (aeronautics, electronics, telecommunications, software, bio-technologies) represent about 40% of GDP. The other important activity sectors in Israel are diamond cutting, textile and tourism. This last one is always significant despite the Israeli-Palestian conflict.
International trade
The Israeli economy is extremely open. Trade represents nearly three quarters of GDP (average 2008-2010), and exports, the backbone of the country's growth, about 24% of GNP. The trade balance of Israel, before deficit, recorded a record surplus in 2009 due to a sharp drop in imports. The situation was reversed again in 2010 and the deficit worsened in 2011.
The main customers and suppliers of Israel are the European Union, the United States, Turkey, Japan, India and China. The main goods imported by the Israeli state are raw materials and half-finished products, hydrocarbons, consumption goods (food products and drinks, electrical equipment, transport equipment, etc.) and investment products. The main national exports are manufactured goods which are often high technology products (computer equipment, electronic components, aeronautics, electronic communication equipment, verification products and pharmaceutical products).
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Last updates: May 2012
