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Israel vs. Gaza Strip

Economy

IsraelGaza Strip
Economy - overview"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.

Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. 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 resilient banking sector. Israel's economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East insulated the economy from spillover effects.

Slowing domestic and international demand and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.8% per year during the period 2014-17. 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. Political and regulatory issues have delayed the development of the massive Leviathan field, but production from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in 2014. One of the most carbon intense OECD countries, Israel generates about 57% of its power from coal and only 2.6% from renewable sources.

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 the well-being of younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high in 2016. Private consumption is expected to drive growth through 2018 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.
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Israeli security measures and Israeli-Palestinian violence continue to degrade economic conditions in the Gaza Strip, the smaller of the two areas comprising the Palestinian territories. Israeli-imposed border controls became more restrictive after HAMAS seized control of the territory in June 2007. They have produced high unemployment, elevated poverty rates, and a sharp contraction of the private sector, which had relied primarily on export markets.

Egypt’s ongoing crackdown on the Gaza Strip’s extensive tunnel-based smuggling network has exacerbated fuel, construction material, and consumer goods shortages in the territory. The 51-day conflict in July 2014 that HAMAS and other Gaza-based militant groups fought with Israel further depressed the Gaza Strip’s already aid-dependent economy. Donor support for reconstruction and relaxed Israeli import restrictions in 2014 and 2015 have fallen short of postconflict needs, with almost 100,000 people remaining internally displaced because their homes have yet to be rebuilt or repaired.
GDP (purchasing power parity)$315.6 billion (2017 est.)
$306.1 billion (2016 est.)
$294.5 billion (2015 est.)
note: data are in 2017 dollars
see entry for the West Bank
GDP - real growth rate3.1% (2017 est.)
4% (2016 est.)
2.6% (2015 est.)
-15.2% (2014 est.)
5.6% (2013)
7% (2012)
note: excludes the West Bank
GDP - per capita (PPP)$36,200 (2017 est.)
$35,800 (2016 est.)
$35,200 (2015 est.)
note: data are in 2017 dollars
see entry for the the West Bank
GDP - composition by sectoragriculture: 2.3%
industry: 26.6%
services: 69.5% (2017 est.)
agriculture: 3%
industry: 21.1%
services: 62.5%
note: data exclude the West Bank (2017 est.)
Population below poverty line22%
note: Israel's poverty line is $7.30 per person per day (2014 est.)
30%
note: data exclude the West Bank (2011 est.)
Inflation rate (consumer prices)0.2% (2017 est.)
-0.5% (2016 est.)
0.8% (2017 est.)
-0.2% (2016 est.)
note: 2.9% excludes the West Bank
Labor force4.021 million (2017 est.)
1.24 million
note: excludes the West Bank (2017 est.)
Labor force - by occupationagriculture: 1.1%
industry: 17.3%
services: 81.6% (2015)
agriculture: 5.2%
industry: 10%
services: 84.8%
note: data exclude the West Bank (2015 est.)
Unemployment rate4.3% (2017 est.)
4.8% (2016 est.)
26.7% (2017 est.)
26.9% (2016 est.)
note: data exclude the West Bank
Budgetrevenues: $92.82 billion
expenditures: $102.1 billion (2017 est.)
see entry for the West Bank (2017 est.)
Industrieshigh-technology products (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, pharmaceuticals, construction, metal products, chemical products, plastics, cut diamonds, textiles, footwear
textiles, food processing, furniture
Industrial production growth rate4% (2017 est.)
4%
note: see entry for the West Bank (2017 est.)
Agriculture - productscitrus, vegetables, cotton; beef, poultry, dairy products
olives, fruit, vegetables, flowers; beef, dairy products
Exports$60.6 billion (2017 est.)
$56.17 billion (2016 est.)
$1.955 billion (2017 est.)
$1.827 billion (2016 est.)
Exports - commoditiesmachinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles and apparel
strawberries, carnations, vegetables, fish (small and irregular shipments, as permitted to transit the Israeli-controlled Kerem Shalom crossing)
Imports$66.76 billion (2017 est.)
$63.54 billion (2016 est.)
see entry for the West Bank
Imports - commoditiesraw materials, military equipment, investment goods, rough diamonds, fuels, grain, consumer goods
food, consumer goods, fuel
Debt - external$93.02 billion (31 December 2017 est.)
$87.96 billion (31 December 2016 est.)
see entry for the West Bank
Exchange ratesnew Israeli shekels (ILS) per US dollar -
3.606 (2017 est.)
3.8406 (2016 est.)
3.8406 (2015 est.)
3.8869 (2014 est.)
3.5779 (2013 est.)
see entry for the West Bank
Fiscal yearcalendar year
calendar year
Reserves of foreign exchange and gold$113 billion (31 December 2017 est.)
$95.45 billion (31 December 2016 est.)
$312.8 million (31 December 2016 est.)
$583 million (31 December 2015 est.)
Current Account Balance$14.28 billion (2017 est.)
$11.57 billion (2016 est.)
-$1.444 billion (2017 est.)
-$1.348 billion (2016 est.)
note: excludes the West Bank
GDP (official exchange rate)$348 billion (2016 est.)
$2.938 billion (2014 est.)
note: excludes the West Bank
Commercial bank prime lending rate3.3% (31 December 2017 est.)
3.42% (31 December 2016 est.)
see entry for the West Bank
Stock of domestic credit$280.8 billion (31 December 2017 est.)
$257.5 billion (31 December 2016 est.)
$2.041 billion (31 December 2017 est.)
$1.712 billion (31 December 2016 est.)
Stock of narrow money$98.28 billion (31 December 2017 est.)
$79.58 billion (31 December 2016 est.)
see entry for the West Bank
Stock of broad money$223.1 billion (31 December 2017 est.)
$189 billion (31 December 2016 est.)
$2.901 billion (31 December 2017 est.)
$2.538 billion (31 December 2016 est.)
Unemployment, youth ages 15-24total: 8.6%
male: 8.2%
female: 9.1% (2016 est.)
total: 40.7%
male: 36.4%
female: 60.8%
note: includes the West Bank (2015 est.)
GDP - composition, by end usehousehold consumption: 55.4%
government consumption: 22%
investment in fixed capital: 20.5%
investment in inventories: 0.2%
exports of goods and services: 29.8%
imports of goods and services: -27.9% (2017 est.)
household consumption: 91.3%
government consumption: 26.7%
investment in fixed capital: 23%
investment in inventories: 0%
exports of goods and services: 20%
imports of goods and services: -61%
note: data exclude the West Bank (2017 est.)

Source: CIA Factbook