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Israel vs. Lebanon

Economy

IsraelLebanon
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 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.

Lebanon has a free-market economy and a strong laissez-faire commercial tradition. The government does not restrict foreign investment; however, the investment climate suffers from red tape, corruption, arbitrary licensing decisions, complex customs procedures, high taxes, tariffs, and fees, archaic legislation, and inadequate intellectual property rights protection. The Lebanese economy is service-oriented; main growth sectors include banking and tourism.

The 1975-90 civil war seriously damaged Lebanon's economic infrastructure, cut national output by half, and derailed Lebanon's position as a Middle Eastern banking hub. Following the civil war, Lebanon rebuilt much of its war-torn physical and financial infrastructure by borrowing heavily, mostly from domestic banks, which saddled the government with a huge debt burden. Pledges of economic and financial reforms made at separate international donor conferences during the 2000s have mostly gone unfulfilled, including those made during the Paris III Donor Conference in 2007, following the July 2006 war. The "CEDRE" investment event hosted by France in April 2018 again rallied the international community to assist Lebanon with concessional financing and some grants for capital infrastructure improvements, conditioned upon long-delayed structural economic reforms in fiscal management, electricity tariffs, and transparent public procurement, among many others.

The Syria conflict cut off one of Lebanon's major markets and a transport corridor through the Levant. The influx of nearly one million registered and an estimated 300,000 unregistered Syrian refugees has increased social tensions and heightened competition for low-skill jobs and public services. Lebanon continues to face several long-term structural weaknesses that predate the Syria crisis, notably, weak infrastructure, poor service delivery, institutionalized corruption, and bureaucratic over-regulation. Chronic fiscal deficits have increased Lebanon’s debt-to-GDP ratio, the third highest in the world; most of the debt is held internally by Lebanese banks. These factors combined to slow economic growth to the 1-2% range in 2011-17, after four years of averaging 8% growth. Weak economic growth limits tax revenues, while the largest government expenditures remain debt servicing, salaries for government workers, and transfers to the electricity sector. These limitations constrain other government spending, limiting its ability to invest in necessary infrastructure improvements, such as water, electricity, and transportation. In early 2018, the Lebanese government signed long-awaited contract agreements with an international consortium for petroleum exploration and production as part of the country’s first offshore licensing round. Exploration is expected to begin in 2019.

GDP (purchasing power parity)
$317.1 billion (2017 est.)
$307 billion (2016 est.)
$295.3 billion (2015 est.)

note: data are in 2017 dollars

$88.25 billion (2017 est.)
$86.94 billion (2016 est.)
$85.45 billion (2015 est.)

note: data are in 2017 dollars

GDP - real growth rate
3.3% (2017 est.)
4% (2016 est.)
2.6% (2015 est.)
1.5% (2017 est.)
1.7% (2016 est.)
0.2% (2015 est.)
GDP - per capita (PPP)
$36,400 (2017 est.)
$35,900 (2016 est.)
$35,200 (2015 est.)

note: data are in 2017 dollars

$19,600 (2017 est.)
$19,500 (2016 est.)
$19,300 (2015 est.)

note: data are in 2017 dollars

GDP - composition by sector
agriculture: 2.4% (2017 est.)
industry: 26.5% (2017 est.)
services: 69.5% (2017 est.)
agriculture: 3.9% (2017 est.)
industry: 13.1% (2017 est.)
services: 83% (2017 est.)
Population below poverty line
22% (2014 est.) (2014 est.)

note: Israel's poverty line is $7.30 per person per day

28.6% (2004 est.)
Household income or consumption by percentage share
lowest 10%: 1.7%
highest 10%: 31.3% (2010)
lowest 10%: NA
highest 10%: NA
Inflation rate (consumer prices)
0.2% (2017 est.)
-0.5% (2016 est.)
4.5% (2017 est.)
-0.8% (2016 est.)
Labor force
4.021 million (2017 est.)
2.166 million (2016 est.)

note: excludes as many as 1 million foreign workers and refugees

Labor force - by occupation
agriculture: 1.1%
industry: 17.3%
services: 81.6% (2015 est.)
agriculture: 39% NA (2009 est.)
industry: NA
services: NA
Unemployment rate
4.2% (2017 est.)
4.8% (2016 est.)
9.7% (2007)
Budget
revenues: 93.11 billion (2017 est.)
expenditures: 100.2 billion (2017 est.)
revenues: 11.62 billion (2017 est.)
expenditures: 15.38 billion (2017 est.)
Industries
high-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
banking, tourism, real estate and construction, food processing, wine, jewelry, cement, textiles, mineral and chemical products, wood and furniture products, oil refining, metal fabricating
Industrial production growth rate
3.5% (2017 est.)
-21.1% (2017 est.)
Agriculture - products
citrus, vegetables, cotton; beef, poultry, dairy products
citrus, grapes, tomatoes, apples, vegetables, potatoes, olives, tobacco; sheep, goats
Exports
$58.67 billion (2017 est.)
$56.17 billion (2016 est.)
$3.524 billion (2017 est.)
$3.689 billion (2016 est.)
Exports - commodities
machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles and apparel
jewelry, base metals, chemicals, consumer goods, fruit and vegetables, tobacco, construction minerals, electric power machinery and switchgear, textile fibers, paper
Exports - partners
US 28.8%, UK 8.2%, Hong Kong 7%, China 5.4%, Belgium 4.5% (2017)
China 13%, UAE 9.9%, South Africa 7.5%, Saudi Arabia 6.5%, Syria 6.5%, Iraq 5.8%, Turkey 4.6% (2017)
Imports
$68.61 billion (2017 est.)
$63.9 billion (2016 est.)
$18.34 billion (2017 est.)
$17.71 billion (2016 est.)
Imports - commodities
raw materials, military equipment, investment goods, rough diamonds, fuels, grain, consumer goods
petroleum products, cars, medicinal products, clothing, meat and live animals, consumer goods, paper, textile fabrics, tobacco, electrical machinery and equipment, chemicals
Imports - partners
US 11.7%, China 9.5%, Switzerland 8%, Germany 6.8%, UK 6.2%, Belgium 5.9%, Netherlands 4.2%, Turkey 4.2%, Italy 4% (2017)
China 10.2%, Italy 8.9%, Greece 7%, Germany 6.6%, US 6.3%, Turkey 4.5%, Egypt 4.2% (2017)
Debt - external
$88.66 billion (31 December 2017 est.)
$87.96 billion (31 December 2016 est.)
$39.3 billion (31 December 2017 est.)
$36.6 billion (31 December 2016 est.)
Exchange rates
new 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.)
Lebanese pounds (LBP) per US dollar -
1,507.5 (2017 est.)
1,507.5 (2016 est.)
1,507.5 (2015 est.)
1,507.5 (2014 est.)
1,507.5 (2013 est.)
Fiscal year
calendar year
calendar year
Public debt
60.9% of GDP (2017 est.)
62.3% of GDP (2016 est.)
146.8% of GDP (2017 est.)
145.5% of GDP (2016 est.)

note: data cover central government debt and exclude debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment

Reserves of foreign exchange and gold
$113 billion (31 December 2017 est.)
$95.45 billion (31 December 2016 est.)
$55.42 billion (31 December 2017 est.)
$54.04 billion (31 December 2016 est.)
Current Account Balance
$10.12 billion (2017 est.)
$11.94 billion (2016 est.)
-$12.37 billion (2017 est.)
-$11.18 billion (2016 est.)
GDP (official exchange rate)
$350.7 billion (2017 est.)
$54.18 billion (2017 est.)
Stock of direct foreign investment - at home
$129.1 billion (31 December 2017 est.)
$107.3 billion (31 December 2016 est.)
$61.02 billion (2016)
$58.46 billion (2015)
Stock of direct foreign investment - abroad
$100.3 billion (31 December 2017 est.)
$98.11 billion (31 December 2016 est.)
$13.46 billion (2016)
$12.69 billion (2015)
Market value of publicly traded shares
$243.9 billion (31 December 2015 est.)
$200.5 billion (31 December 2014 est.)
$203.3 billion (31 December 2013 est.)
$11.22 billion (30 December 2014 est.)
$10.54 billion (30 December 2013 est.)
$10.42 billion (28 December 2012 est.)
Central bank discount rate
0.1% (15 December 2015)
0.25% (31 December 2014)
10% (31 December 2017)
10% (31 December 2016)
Commercial bank prime lending rate
3.5% (31 December 2017 est.)
3.42% (31 December 2016 est.)
8.29% (31 December 2017 est.)
8.35% (31 December 2016 est.)
Stock of domestic credit
$290.7 billion (31 December 2017 est.)
$257.4 billion (31 December 2016 est.)
$108.2 billion (31 December 2017 est.)
$104 billion (31 December 2016 est.)
Stock of narrow money
$100.4 billion (31 December 2017 est.)
$79.58 billion (31 December 2016 est.)
$7.047 billion (31 December 2017 est.)
$6.739 billion (31 December 2016 est.)
Stock of broad money
$100.4 billion (31 December 2017 est.)
$79.58 billion (31 December 2016 est.)
$7.047 billion (31 December 2017 est.)
$6.739 billion (31 December 2016 est.)
Taxes and other revenues
26.5% (of GDP) (2017 est.)
21.5% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-2% (of GDP) (2017 est.)
-6.9% (of GDP) (2017 est.)
GDP - composition, by end use
household consumption: 55.1% (2017 est.)
government consumption: 22.8% (2017 est.)
investment in fixed capital: 20.1% (2017 est.)
investment in inventories: 0.7% (2017 est.)
exports of goods and services: 28.9% (2017 est.)
imports of goods and services: -27.5% (2017 est.)
household consumption: 87.6% (2017 est.)
government consumption: 13.3% (2017 est.)
investment in fixed capital: 21.8% (2017 est.)
investment in inventories: 0.5% (2017 est.)
exports of goods and services: 23.6% (2017 est.)
imports of goods and services: -46.4% (2017 est.)
Gross national saving
23.6% of GDP (2017 est.)
24.2% of GDP (2016 est.)
25% of GDP (2015 est.)
-0.7% of GDP (2017 est.)
0.7% of GDP (2016 est.)
4.5% of GDP (2015 est.)

Source: CIA Factbook