Israel Economic Snapshot

GDP growth is projected to moderate from a strong 6.3% in 2022 to 2.8% in 2023 and 3.4% in 2024. The global slowdown is set to weaken demand from Israel’s trading partners. Elevated inflation will slow disposable income and private consumption. Increasing interest rates and lower stock market valuations will weigh on investment. Growth is projected to pick up towards its potential rate in 2024 as inflation abates.

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To build a resilient and strong recovery, policy should focus on upskilling and education. The COVID-19 crisis threatens to aggravate Israel’s long-standing challenges of high poverty, especially among the Ultra-Orthodox and Arab Israelis, and wide productivity disparity between its vibrant high-tech sector and more traditional and sheltered sectors, which employ most of the workforce and account for most of the productivity shortfall vis-à-vis the best performing OECD countries.

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