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     VIENNA CONVENTION ON THE LAW OF TREATIES
  Bi-national Chambers of Commerce

Israel has a diversified, technologically advanced economy with substantial but decreasing government ownership and a strong high-tech sector. The major industrial sectors include high-technology electronic and biomedical equipment, metal products, processed foods, chemicals, and transport equipment. Israel possesses a substantial service sector and is one of the world's centers for diamond cutting and polishing. It also is a world leader in software development and, prior to the violence that began in September 2000, was a major tourist destination.

Israel's strong commitment to economic development and its talented work force led to economic growth rates during the nation's first two decades that frequently exceeded 10% annually. The years after the 1973 Yom Kippur War were a lost decade economically, as growth stalled and inflation reached triple-digit levels. The successful economic stabilization plan implemented in 1985 and the subsequent introduction of market-oriented structural reforms reinvigorated the economy and paved the way for rapid growth in the 1990s.

A wave of Jewish immigration beginning in 1989, predominantly from the countries of the former U.S.S.R., brought nearly a million new citizens to Israel. These new immigrants, many of them highly educated, now constitute some 13% of Israel's 6.7 million inhabitants. Their successful absorption into Israeli society and its labor force forms a remarkable chapter in Israeli history. The skills brought by the new immigrants and their added demand as consumers gave the Israeli economy a strong upward push and in the 1990’s, they played a key role in the ongoing development of Israel's high-tech sector.

During the 1990s, progress in the Middle East peace process, beginning with the Madrid Conference of 1991, helped to reduce Israel's economic isolation from its neighbors and opened up new markets to Israeli exporters farther afield. The peace process stimulated an unprecedented inflow of foreign investment in Israel, and provided a substantial boost to economic growth in the region over the last decade. The onset of the intifada beginning at the end of September of 2000, the downturn in the high-tech sector and Nasdaq crisis, and the slowdown of the global economy have all significantly affected the Israeli economy. However, despite the recent conflicts in Gaza and Lebanon, the Israeli economy grew during 2006.

Israel has a technologically advanced market economy. It depends on imports of crude oil,grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, its major source of economic and military aid. Israel's GDP, after contracting slightly in 2001 and 2002 due to the Palestinian conflict and troubles in the high-technology sector, grew about 5% per year from 2003-07. 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 series of liberalizing reforms - and a resilient banking sector, and the economy has rebounded quickly. Following GDP growth of 4% in 2008, Israel's GDP contracted 0.3% in 2009 but is expected to expand in 2010. The global economic downturn affected Israel's economy primarily through reduced demand for Israel's exports - which account for about 45% of the country's GDP - in the United States and EU, Israel's top trading partners. The Israeli Government responded to the recession by implementing a fiscal stimulus package and an aggressive expansionary monetary policy - including cutting interest rates to record lows, purchasing government bonds, and intervening in the foreign currency market.

GDP (purchasing power parity):
$205.2 billion (2009 est.)

$205.9 billion (2008 est.)
$197.6 billion (2007 est.)
note: data are in 2009 US dollars
[see also: GDP (purchasing power parity) country ranks ]

GDP (official exchange rate):
$215.7 billion (2009 est.)
[see also: GDP (official exchange rate) country ranks ]

GDP - real growth rate:
-0.3% (2009 est.)

4.2% (2008 est.)
5.2% (2007 est.)
[see also: GDP - real growth rate country ranks ]

GDP - per capita:
$28,400 (2009 est.)

$28,900 (2008 est.)
$28,300 (2007 est.)
note: data are in 2009 US dollars
[see also: GDP - per capita country ranks ]

GDP - composition by sector:
agriculture: 2.6%
[see also: GDP - composition by sector - agriculture country ranks ]
industry: 32%
[see also: GDP - composition by sector - industry country ranks ]
services: 65.4% (2009 est.)
[see also: GDP - composition by sector - services country ranks ]

Labor force:
3.01 million (2009 est.)
[see also: Labor force country ranks ]

Labor force - by occupation:
agriculture: 2%
[see also: Labor force - by occupation - agriculture country ranks ]
industry: 16%
[see also: Labor force - by occupation - industry country ranks ]
services: 82% (30 September 2008)
[see also: Labor force - by occupation - services country ranks ]

Unemployment rate:
8% (2009 est.)

6.1% (2008 est.)
[see also: Unemployment rate country ranks ]

Population below poverty line:
23.6%
note: Israel's poverty line is $7.30 per person per day (2005)
[see also: Population below poverty line country ranks ]

Household income or consumption by percentage share:
lowest 10%: 2.5%
[see also: Household income or consumption by percentage share - lowest 10% country ranks ]
highest 10%: 24.3% (2007)
[see also: Household income or consumption by percentage share - highest 10% country ranks ]

Distribution of family income - Gini index:
39.2 (2008)

35.5 (2001)
[see also: Distribution of family income - Gini index country ranks ]

Investment (gross fixed):
17.1% of GDP (2009 est.)
[see also: Investment (gross fixed) country ranks ]

Budget:
revenues: $54.1 billion
[see also: Budget - revenues country ranks ]
expenditures: $64.24 billion (2009 est.)
[see also: Budget - expenditures country ranks ]

Public debt:
83.9% of GDP (2009 est.)

76.8% of GDP (2008 est.)
[see also: Public debt country ranks ]

Inflation rate (consumer prices):
3.4% (2009 est.)

4.6% (2008 est.)
[see also: Inflation rate (consumer prices) country ranks ]

Central bank discount rate:
2.5% (31 December 2008)

4% (31 December 2007)
[see also: Central bank discount rate country ranks ]

Commercial bank prime lending rate:
6.06% (31 December 2008)

6.27% (31 December 2007)
[see also: Commercial bank prime lending rate country ranks ]

Stock of money:
$20.73 billion (31 December 2007)

$15.36 billion (31 December 2006)
[see also: Stock of money country ranks ]

Stock of quasi money:
$171.6 billion (31 December 2008)

$154.3 billion (31 December 2007)
[see also: Stock of quasi money country ranks ]

Stock of domestic credit:
$145.2 billion (31 December 2007)

$113.4 billion (31 December 2006)
[see also: Stock of domestic credit country ranks ]

Market value of publicly traded shares:
$134.5 billion (31 December 2008)

$236.4 billion (31 December 2007)
$173.3 billion (31 December 2006)
[see also: Market value of publicly traded shares country ranks ]

Agriculture - products:
citrus, vegetables, cotton; beef, poultry, dairy products

Industries:
high-technology projects (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, construction, metals products, chemical products, plastics, diamond cutting, textiles, footwear

Industrial production growth rate:
-1.5% (2009 est.)
[see also: Industrial production growth rate country ranks ]

Electricity - production:
50.41 billion kWh (2007 est.)
[see also: Electricity - production country ranks ]

Electricity - consumption:
46.15 billion kWh (2007 est.)
[see also: Electricity - consumption country ranks ]

Electricity - exports:
2.081 billion kWh (2007 est.)
[see also: Electricity - exports country ranks ]

Electricity - imports:
0 kWh (2008 est.)
[see also: Electricity - imports country ranks ]

Oil - production:
5,246 bbl/day (2008 est.)
[see also: Oil - production country ranks ]

Oil - consumption:
235,000 bbl/day (2008 est.)
[see also: Oil - consumption country ranks ]

Oil - exports:
69,580 bbl/day (2007 est.)
[see also: Oil - exports country ranks ]

Oil - imports:
318,900 bbl/day (2007 est.)
[see also: Oil - imports country ranks ]

Oil - proved reserves:
1.94 million bbl (1 January 2009 est.)
[see also: Oil - proved reserves country ranks ]

Natural gas - production:
1.19 billion cu m (2008 est.)
[see also: Natural gas - production country ranks ]

Natural gas - consumption:
1.19 billion cu m (2008 est.)
[see also: Natural gas - consumption country ranks ]

Natural gas - exports:
0 cu m (2008 est.)
[see also: Natural gas - exports country ranks ]

Natural gas - imports:
0 cu m (2008 est.)
[see also: Natural gas - imports country ranks ]

Natural gas - proved reserves:
30.44 billion cu m (1 January 2009 est.)
[see also: Natural gas - proved reserves country ranks ]

Current account balance:
$5.465 billion (2009 est.)

$1.596 billion (2008 est.)
[see also: Current account balance country ranks ]

Exports:
$44.35 billion (2009 est.)

$60.83 billion (2008 est.)
[see also: Exports country ranks ]

Exports - commodities:
machinery and equipment, software, cut diamonds, agricultural products, chemicals, textiles and apparel

Exports - partners:
US 32.5%, Belgium 7.5%, Hong Kong 6.7% (2008)

Imports:
$47.4 billion (2009 est.)

$67.66 billion (2008 est.)
[see also: Imports country ranks ]

Imports - commodities:
raw materials, military equipment, investment goods, rough diamonds, fuels, grain, consumer goods

Imports - partners:
US 12.3%, Belgium 6.5%, China 6.5%, Switzerland 6.1%, Germany 6% (2008)

Reserves of foreign exchange and gold:
$56.64 billion (31 December 2009 est.)

$42.51 billion (31 December 2008 est.)
[see also: Reserves of foreign exchange and gold country ranks ]

Debt - external:
$84.69 billion (31 December 2009 est.)

$86.08 billion (31 December 2008 est.)
[see also: Debt - external country ranks ]

Stock of direct foreign investment - at home:
$60.68 billion (31 December 2009 est.)

$56.93 billion (31 December 2008 est.)
[see also: Stock of direct foreign investment - at home country ranks ]

Stock of direct foreign investment - abroad:
$55.65 billion (31 December 2009 est.)

$54.55 billion (31 December 2008 est.)
[see also: Stock of direct foreign investment - abroad country ranks ]

NOTE: The information regarding Israel on this page is re-published from the 2010 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Israel Economy 2010 information contained here. All suggestions for corrections of any errors about Israel Economy 2010 should be addressed to the CIA.


Last Updated:
Sep. 02, 2010
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