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GDP
2024: GDP growth forecast lowered to 1.1%
Israel's Finance Ministry cut its growth forecast in September 2024 as the Gaza war hits the economy. GDP growth forecast for 2024 is reduced to 1.1% from 1.9%. The forecast for 2025 has been reduced to 4.4% from 4.6%.
2023: Q4 GDP cut by 19.4% due to war with Hamas
The Israeli economy amid the conflict with Hamas in the fourth quarter of 2023 contracted by 19.4% compared to the same period the previous year. At the same time, for 2023 as a whole, GDP grew by about 2%. This is evidenced by the data of the Central Bureau of Statistics of the country, published on February 19, 2024.
It is noted that the decline recorded in the last quarter of 2023 was the most significant decline since the second quarter of 2020, when the Israeli economy contracted by almost 30%. Then the negative dynamics was due to the strict restrictions imposed in response to the COVID-19 pandemic. The spread of the coronavirus provoked the closure or suspension of many companies and organizations, and consumer spending began to decline.
In the fourth quarter of 2023, amid the confrontation with Hamas, consumer spending in Israel collapsed on an annualized basis by 26.9%, business investment - by 67.8%, exports - by 18.3%, imports - by 42%. At the same time, government spending rose by 88.1%, which is primarily associated with military costs.
In 2023, in general, individual consumption in Israel decreased by 0.7% after an increase of 7.4% in 2022. Imports of goods and services fell by 6.9%, while in 2022 an increase of 12% was recorded. Exports shrank in 2023 by 1.1% compared to an 8.6% increase a year earlier.
In February 2024, the American rating agency Moody's lowered Israel's credit rating by one notch - from A1 to A2 and changed its forecast to "negative." The country's largest bank Apoalim believes that the Israeli economy will return to growth in the first quarter of 2024, but the dynamics will be below the level of the third quarter of 2023 - before the outbreak of armed conflict.[1]
2022: GDP size forecast - $0.52 trillion
2021: GDP size - $0.47 trillion
Financial system
National debt
2024: Public debt rises to 67% of GDP amid war with Palestine
2023: State debt - 61% of GDP
2017: State debt - 61% of GDP
International reserves $200 billion
In April 2022, the Israeli Central Bank made the largest changes in the distribution of reserves over the past ten years, adding the Chinese yuan along with three other currencies to reserves that exceeded $200 billion for the first time in 2021.
"Canadian, Australian and Japanese currencies have also been added to the basket. These additions mean a change in "all Bank of Israel investment principles and philosophy," Deputy Governor Andrew Abir said.
Budget
2024: Budget deficit of 6.6% of GDP due to spending to destroy Palestine
On March 13, 2024, the Israeli parliament finally approved the revised budget for 2024, inflated by the cost of destroying Palestine, which will reach a record level.
The budget plan calls for a deficit of 6.6% of GDP, one of the biggest deficits for Israel this century. Expenses will amount to 584 billion shekels ($160 billion), which is almost 70 billion shekels more than in the pre-war version of the budget. Defense spending alone will increase by 55 billion shekels.
Inflation
2024: Inflation accelerates to 3.6%
Inflation in Israel accelerated more than expected in August 2024 to 3.6% year-on-year as the Gaza war strains the economy and government spending rises.
2022: Annual inflation hits 20-year high at 5.3%
In mid-January 2023, it became known that the inflation rate in Israel in 2022 reached its maximum in 20 years. This is due, in particular, to the increase in the cost of housing, telecommunications services, food and transport.
According to the Israeli Central Bureau of Statistics, inflation in the country was recorded at 5.3% in 2022. For comparison: in 2021, the growth was 2.8%. The inflation indicator in 2022 became the highest since 2002: then the value was 6.3%, after which it did not exceed 3.9%. Bank of Israel Governor Amir Yaron said inflation pressures are expected to continue in early 2023 before starting to gradually decline, albeit at a slower pace than previously forecast.
 | High inflation entails growing uncertainty and complexity of decision-making at the household and business level, has a negative impact on the economic behavior and well-being of citizens, primarily among the weaker segments of the population, "Yaron emphasized. |  |
The consumer price index (CPI) in Israel increased by 0.3% in December 2022 compared to November of the same year. The cost of transportation has sharply increased - plus 1.1%. Housing and medical services have risen in price by 0.6%, and the cost of maintaining apartments has risen by 0.2%. On the other hand, prices for fresh fruits and vegetables decreased by 2.8%. In the segment of culture and entertainment, a drop of 1.4% was recorded. Clothing and footwear fell by about 1%.
In 2022, in general, transport and communications went up by 9.2%, housing - by 6.3%, apartment maintenance - by 5.7%, food - by 4.9%. Consumer prices have jumped a combined 9% since 2017, according to the Central Bureau of Statistics. Nevertheless, inflation in Israel remains lower than in most developed countries.[2]
Banks
- Apoalim (Bank Hapoalim) is the largest bank in the country.
Power
2023:98 power plants in operation
Israel's energy system is quite diversified. In total, 98 power plants are located in the country by 2023. The generation core runs on coal, gas and fuel oil. But the system also includes solar and wind power plants. The total volume of generation is more than 14,443 MW, excluding generation of stations on renewable energy sources.
2020: Average energy consumption per capita
and
Mining
East Mediterranean Pipeline
Main article: EastMed (Eastern Mediterranean Pipeline)
2022
Demarcation of the maritime borders between Israel and Lebanon with the separation of gas fields
On October 11, 2022, officials Israel Lebanon and through the mediation of Special Representative USA Amos Hochstein reached an agreement on the demarcation of maritime borders between the countries.
The main stone in the years-long negotiations was the gas fields in the Mediterranean Sea and the issue of their ownership. Under the current agreement, sea borders will pass along line 23. The signing of the contract is tentatively scheduled for October 26. The Israeli authorities will gain control of the Karish field, and Lebanon will take the Kana deposits, albeit with some nuances.
Since Kana crosses the established border along line 23, Israel will be entitled to part of the profit from the sale of resources under a contract with the French company Total. The amount of payments will be regulated through the mediation of the American government.
For the Israeli authorities, the deal is a great success: after years of territorial disputes, the government will legally be able to start developing the Karish field. Thanks to the agreement with Total, Israelis do not need to spend resources on the development and construction of infrastructure for gas production.
In a global energy crisis, fields will help Israel meet its own hydrocarbon needs. Export plans to Europe raise doubts: gas reserves off the coast amount to just over 68 billion cubic meters, which is not enough to simultaneously meet domestic needs and sell abroad.
The American leadership again demonstrated mediation capabilities in the Middle East, ensuring the resolution of the territorial dispute between countries officially at war.
The administration of US President Biden was important to act as the main mediator of all regional disputes, especially before the midterm congressional elections. And they coped with this task in Washington.
The Lebanese authorities not only de facto lost more than 1800 square kilometers at sea: it is still unknown how much cubic meters of gas is contained in the Kana field.
According to the most optimistic estimates, its reserves can reach more than 424 billion cubic meters, which ideally will allow the authorities in Beirut to earn up to $6 billion annually for 15 years. But by agreement, part of the amount will go to Israel, and the rest will go to cover the colossal national debt of $100 billion.
However, the ongoing political and economic crisis since 2019 actually left the Lebanese authorities with no choice. For the government of the country, even a meager opportunity to get at least some profit is a lifeline designed to somehow correct the situation.
Hezbollah Secretary General Hassan Nasrallah greeted the conclusion of the demarcation treaty with restraint. He noted that the Kana field is a great opportunity to help the Lebanese people. The statement was forced: years of political and economic crisis greatly shook the positions of all Lebanese political forces, and Hezbollah was no exception.
Criticism of the agreement with Israel would further reduce the popularity of the group among the poor, so the Shiite organization chose not to openly oppose the treaty with the worst enemy. Pragmatic Hezbollah, by the way, has consistently adhered to this position since November 2020.
However, among the radical members of the organization, Lebanon's agreement with Israel is a "defeat and weak-willed concession." In their opinion, the distinction should have passed along line 29.
Israel The United States and Russia expect an escalation of tensions and attempts to disrupt the signing of the treaty by both Hezbollah and the outside. Iran
In the past few days, an air hub and a E-11A communications relay have been patrolling along the coast of Lebanon, acting in the interests of the special forces of the Army and the US MTR command.
And south of Cyprus, at least two F-22 Raptor fighters deployed to the Souda Bay air base on the island of Crete as part of the exercise of the US Armed Forces and Ace allies demonstrate their American presence every day.
EU Gas Export Agreement
On June 15, 2022, the EU, Israel and Egypt signed an agreement on the supply of Israeli gas to the countries of the European Union, according to the Associated Press (AP).
"I hearts welcome the signing of this historic agreement from all over," European Commission President Ursula von der Leyen said in Cairo at a press conference power engineering specialists with Israeli ministers and. Egypt
The agreement provides for an increase in gas supplies from Israel to Egypt to processing facilities, and then the transportation of already liquefied natural gas by tankers to Europe.
According to AP, Israel has two gas fields in the Mediterranean Sea - their total reserves are estimated at 690 billion cubic meters. Work is also underway at the third field. Earlier, Israel signed agreements on gas exports to Egypt and Jordan.
Re-exploration of gas production
At the end of May 2022, it was announced that Israel was resuming exploration of natural gas fields in its territorial waters, despite the fact that it had previously been abandoned for the sake of switching to alternative energy sources.
Geopolitical developments in the world and the global energy crisis that followed completely changed the state of the market, officials said, explaining the policy change.
"Thestate of Israel is mobilizing its forces to assist To Europe in diversifying energy sources," Minister power engineering specialists Karin Elharrar said at a news conference.
IT Market and Cybersecurity
R&D
2020: R&D spending - $12.3 billion
Startups
Main article: Startups in Israel
Foreign trade
2024: Turkey halts exports to Israel demanding more humanitarian aid to Palestine
Turkey's exports to Israel virtually ceased in May 2024, after President Erdogan's government halted trade until Gaza, in which Israel is conducting a punitive operation, received enough humanitarian aid.
Deliveries to Israel fell 99% year-on-year to $4.4 million.
2023
Record arms exports - $13.1 billion with a twofold increase in five years
Exports of Israeli military products in 2023 reached a record level, increasing by $500 million to $13.1 billion, which is twice as much as five years ago, the country's Ministry of Defense reported on June 17, 2024.
Trade with Turkey $6.8 billion
In 2023, the volume of trade between Turkey and Israel amounted to $6.8 billion, of which 76% fell on Turkish exports. Turkey ranks 7th in the list of Israel's largest trading partners.
First case of oil export
On February 13, 2023, it was reported that the first batch of crude oil intended for export was loaded from an Israeli field. Israel began exporting oil produced by the Greek company Energean at the Karish offshore field.
The Karish field has been the subject of a territorial dispute between Israel and Lebanon for many years, as it is located directly on the maritime border of the two countries. Only in October 2022, the Israeli government, with the support of the United States, concluded an agreement with Lebanon on the establishment of a maritime border, based on which Karish remained with Israel, and the neighboring Kana field with Lebanon.
In 2023, Israel adopted additional security measures when shipping the first export batch of oil. The tanker that took the oil from the field disconnected on February 13, 2023 from the tracking system so that its further route could not be traced. In addition, the tanker is escorted by a fire fighting vessel. Who is the buyer of Israeli oil on February 14, 2023 remains unknown, but it is known that the cargo was sold as part of a multi-cargo marketing agreement with the American branch of the Vitol Group energy trader.
| | We are happy and proud that Energean has facilitated Israel's entry into the club of international oil exporters. This is another milestone for us, contributing to the growth of Energean as a significant player in the local and regional markets, "commented Energean CEO Matios Rigas. | |
The Israeli field will be developed by the Greek Energean from the end of 2022, and the French TotalEnergies should be engaged in oil production from the Lebanese field in mid-2023.
A number of fields discovered offshore Israel since 2013 have helped the state reduce dependence on energy imports. According to the Financial Times, for 2023, the country fully provides itself with gas, but still imports a significant part of the oil consumed.[3]
Azerbaijan provides about 40% of Israel's oil needs. In exchange, Azerbaijan receives billions of dollars in modern weapons from Israel.
2019: Computer Device Exports
Agriculture
2001: Main farming model - mixed in arid areas
Tourism
2022: 160,000 tourists from Russia
Russia in 2022 again entered the top five countries in terms of tourist flow to Israel, 160 thousand tourists arrived from the Russian Federation (4th place).
2018: Tourist spending $7bn
Unemployment
2023: Youth unemployment - 5.3%
2020: Unemployment rate - 6%
Incomes of the population
2023: Minimum wage - $1,389
Alcohol market
Minimum age to purchase alcoholic beverages
Consumption
2024: Israel first in the world allowed to sell artificial beef
On January 17, 2024, the Ministry health care Israel announced that the country had approved the sale cultured meat of beef for the first time in the world. The corresponding permission was received by the Israeli startup in the field of food technology. Aleph Farms More. here
2023: Poultry meat is the most consumed type of meat
Notes
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