Does Israel Have a Good Economy?
Israel is one of the most highly-developed countries in the world. Not only is it home to a population of almost nine million people, but it is also a major center for global business, innovation, and tourism. As a result, many tourists and potential investors are interested in the economic health of the country and the answer to the question, “Does Israel have a good economy?”
In this article, we will provide an overview of the Israeli economy, looking at its past, current status, and future prospects. We’ll examine the economic performance and drivers of the Israeli economy, with a particular focus on the growth of the tech and tourism sectors.
Review of Israeli Economy by the Numbers
Let’s start by examining the economic performance of the Israeli economy from a numerical standpoint. According to the International Monetary Fund’s latest World Economic Outlook report, Israel’s Gross Domestic Product (GDP) stood at $345 billion in 2018. This represented a positive 2.5 percent growth rate over 2017, and a 5.2 percent rate of growth over the last five years.
In terms of GDP per capita, the figure was $36,811 in 2017. This is among the highest numbers in the world, and is significantly higher than the GDP per capita figure in the U.S. ($59,531 in 2017).
Furthermore, the unemployment rate in Israel stands at a relatively low 4.7 percent, which is significantly lower than the U.S. rate of 4.9 percent. The percentage of working-age men and women who are employed is also quite high — over 70%.
International Comparisons and Rankings
When considering the Israeli economy in comparison to other countries and regions, two important metrics are often used: the Purchasing Power Parity (PPP) and the Human Development Index (HDI). On the former, Israel has a GDP per capita of $32,091 (PPP) according to the World Bank, which is the equivalent of 36th in the world.
When it comes to the HDI, Israel achieved an impressive 0.903 out of 1 points in 2017, which is in the “very high” range according to the UNDP. This puts the country in the 27th rank in the world, tied with countries such as the UK and Belgium.
The Economy’s Growth Drivers
Now, let’s look in more detail at the factors and industries driving the economy’s growth. The main contributors to the Israeli economy traditionally have been agriculture, manufacturing, and services. But in recent years, the information technology (IT) and tourism sectors have become increasingly important driving forces.
IT Sector
The IT sector in Israel is a major contributor to the economy and has seen tremendous growth in recent years. This includes both the consumer and enterprise technology markets; for example, in the consumer space, companies such as Wix and Frutarom have become major international players, while in the enterprise space, software companies such as Check Point, Mobileye, and NICE Systems have become leading players in the cybersecurity and big data analytics arenas.
Furthermore, the country’s venture capital scene is extremely vibrant and active, with hundreds of millions of US dollars invested in new startups each year.
Tourism Sector
The tourism sector is another major contributor to the Israeli economy. Israel received about 4 million international visitors in 2018, with tourism account for about 4% of the country’s GDP. This includes an impressive 9 million visits from abroad in 2018, and the country has seen an impressive 7% annual increase in tourism since 2011.
Moreover, the country has seen some high-profile tourist events such as Pope Francis’s visit in 2014 and the Eurovision Song Contest in 2019, which generated significant amounts of tourism revenue.
Political and Economic Outlook
Finally, let’s consider the economic and political outlook for Israel going forward. In terms of economic expansion, the country’s GDP growth in the first quarter of 2019 was 4.3%, which is well above the global average.
Furthermore, the Bank of Israel’s recent Monetary Policy Statement indicates that the country’s economy is expected to continue to expand at a robust rate over the next few years, thanks to a combination of continued growth in IT and tourism as well as an expansionary fiscal policy.
The political and security situation in Israel also appears to be relatively stable in the near-term, with no major conflicts on the horizon and a significant level of international support and investment.
The answer to the question “Does Israel have a good economy?” is a resounding yes. The country’s GDP per capita is among the highest in the world, and its economic performance has been strong in recent years and is expected to remain so in the near-term.
Furthermore, Israel has become a major global player in both IT and tourism, with hundreds of millions of US dollars being invested in the country’s startups each year and with the country experiencing a surge in international visitors.
Given all of this, there are good reasons to believe that the Israeli economy will remain strong and vibrant going forward.
