COUNTRY REPORT OF ISRAEL
OVERVIEW OF THE COUNTRY
ISRAEL, a parliamentary republic, is located on the eastern shore of the Mediterranean Sea. The capital of Israel is Jerusalem, & its currency is Shekel (ILS).
Ø 8.547 million people
Ø 20% born overseas
Ø Young population
Ø 20,770 Sq. Kilometres
Ø Hebrew & Arabic
4.Head of State
Ø Reuven Rivlin
Ø Initiation & overseas trade agreements.
The foreign relations of ISRAEL are Israel’s relations with other governments and peoples. Israel’s most important relationship, being the largest trading relationship in the world, is with the United States. However, Israeli governments have traditionally maintained active relations with other nations which are as follows :
Main Import Partners
Major Export Partners
Ø United States
Ø United States
Ø Hong Kong
Ø United Kingdom
Ø Crude Oil
Ø Telecommunications Equipments
Ø Mechanical Machinery
Ø Raw Materials
Ø Agricultural Products
Ø Military & Defense Equipments
Ø Investment Goods
Ø Textiles & Apparel
Ø Rough Diamonds
Ø High Technology Products
The country is world’s one of the leading Greenhouse-food-exporting countries. It exports every year $1.3 billion worth of agricultural products which also includes $1.2 billion of agricultural inputs and technology.
Iarael’s political system is a parliamentary democracy. Politics in Israel is dominated by the Zionist parties. They are divided into 3 camps : Labor Zionism, Revisionist Zionism, Religious Zionism. The Prime Minister is the head of Government & also the leader of a multi party system.
Source : World Bank Report
The above chart shows the political stability of Israel from yr 2002-2017. We can see that the average value of Israel was -1.26 points and minimum was -1.62 points in 2009 & the maximum has gone to -1.05 points in 2014.
In the Middle East, Israel is one of the most stable country, though there is an extremely diverse society which is marked with political and cultural differences between the ultra-Orthodox Jews and secular. There is a fragmented political condition which in variably large coalition governments.
Political condition of Israel is never dull. By analyzing the current situation of Israel we can see the following :
Ø Israeli-Palestinian Conflict : The Palestinian are divided into the secular Fatah movement and the Ialamist Hamas. Whereas the Israeli do not trust the Arab and are also fear of the ascendant Iran rule out any major adjustment towards the Palestinian.
Therefore growing Israeli disappointment over the possibility for a peaceful agreement with the Arab and the Palestinian will help in more Jewish settlements on occupied territories and constant relation with Hamas.
MAJOR ECONOMIC INDICATORS
GDP per capita (USD)
Investment (annual in %)
Inflation Rate (CPI, annual variation in %)
Exchange Rate (vs USD)
Consumption (annual in %)
Economic Growth (%)
As of the end of 2016, Israel’s reported GDP per year was worth 318.74 billion US dollars. The GDP value represents 0.51% of the world economy. The GDP in Israel from 1960 until 2016 was averaged 84.78 USD Billion, reaching a high value of 318.74 USD Billion in 2016. The lowest record was 2.60 USD Billion in 1962.
GDP (Nominal )2017
GDP (Real ) 2017
The major economic sectors of the country are high-technology and industrial manufacturing.
Ø 2.8% of the country’s GDP is derived from Agriculture. 2.7 million of the total labor force, 2.6% are employed in production of agriculture, and 6.3% in services for agriculture. Israel exports agricultural products worth more than $1.3 billion every year & agricultural inputs & technology of $1.2 billion.
Ø Industrial Production Growth Rate(2016) : 2.6%
Unemployment Rate (2016) :5%
Population Below Poverty Line (2016) : 22%
Taxes & Other Revenue (2016) : -25.9%
Budget Surplus (2016) : -2.5%
The above data shows the Israel’s GDP consumption by various parameters.
Ø The parameters include GDP-consumption by end use (2016) which shows Household consumption, Government Consumption, Investment in fixed capital, Exports of Goods &
Ø The other charts shows GDP- Consumption by Sector By Origin (2016) which includes Agriculture, Industry & Services.
An analysis of the Fiscal Policy in 2016, to view points for 2017, & what the expected developments.
Ø With a deficit of 2.1 % of GDP the Government finished 2016, similar to 2015. There is a decline of 62% of the public debt to GDP ratio.
Ø Deficit ceiling for 2017 & 2018 was set at a rate of 2.9% of GDP, but it is expected to lower in 2017 at the rate of 2.5% of GDP, & in 2018 it is expected to go slightly below the ceiling.
Ø The lower-than targeted deficit reflected :
a) Higher expected tax receipts, which was a result of growth which is more rapid than expected. There is an increase in import of the vehicles – resulting highly taxed product.
b) Expenditures were lower than expected.
Ø From the volatile real estate and vehicle markets the contribution of tax receipts increased by 0.8% of GDP between 2012 -2016.
Ø Israel’s primary civilian expenditure is lowest in the OECD, which makes the Government difficult to allocate resources to policy measures which will affect the economic growth in long-term.
According to the new budget rules set by the Law, the state of the budget must be examined by the Government not only for the current year for which the budget has been approved (2017 & 2018), but also for the target set for the later years.
Ø The projection of expenditure for 2019 and 2020 shows that the expected level of expenditure in 2019 is little higher than the expenditure ceiling for that year- comparatively improved than previous years.
Ø There is 6% increase in total budgetary expenditure in 2016, & NIS is 2 billion lower than the expenditure ceiling set in the budget.
Government Activity & Fiscal Policy
Change (%/percentage points)
Total Gov. Revenues (NIS million)
Revenues from Taxes (NIS million)
Total Gov. Expenditure (NIS million)
Gov. domestic deficit excluding credit granted( NIS billion)
Government Domestic Deficit excluding credit granted (% of GDP)
Tax Burden (% of GDP)
According to the Bank of Israel Law, 5770-2010, the Bank of Israel has 3 objectives :
1. Price stability is defined as an annual inflation rate of between 1% and 3%.
2. To support the other objective economic policy of the Government, especially growth, employment & reducing social gaps, including that this should not affect the attainment of price stability.
3. In order to attain the stability & orderly activity of the financial system, Israel’s bank employs various tools, and the Bank intervenes in the foreign exchange market.
The Monetary committee decides on November 27, 2017 to keep the interest rate unchanged at 0.1%.
Ø Some slowdown in activity is seen in the housing market data, with continued increase in home prices at a relative rate.
Ø The global economy continues to gain traction in the positive momentum. Inflation in most major economies remains below target, despite of the improvement in activity and increase in oil prices.
Ø Major central banks shifted their monetary policy to a less expensive direction, but the monetary environment remained very expensive.
Economic indicators: Inflation And Monetary Policy
Inflation: Domestic and global (monthly averages, %)
Monthly change in Consumer Price Index
Monthly change in CPI excluding food, energy, and fruit and vegetables
Inflation rate over the previous 12 months
Inflation expectations derived from the capital market for the next 12 months
Inflation expectations derived from the capital market for the rate in 10 years
Professional forecasters’ average estimate of inflation over the next 12 months
Inflation rate in the eurozone over the past 12 months (1)
Inflation rate in the US over the past 12 months
Interest rates and spreads (monthly averages, percent)
Bank of Israel interest rate
Central bank interest rate differential between Israel and the US
Yield on 12 month makam
Yield on 12 month US Treasury bills
Professional forecasters’ average estimate of interest over the next 12 months
Yield on unindexed 10-year government bond
Yield on 10-year US Treasury note
Yield spread between unindexed 10-year government bond and 3-month makam (slope of nominal curve)
1 Israeli New Shekel equals
18.36 Indian Rupee
The Foreign policy of Israel was established 100 years prior to its establishment when Zionist ideology and diplomacy was dominated by state-seeking and state-making. The element of state-keeping was determined the foreign policy after the state was established. Following 7 factors emerged in defining and applying Israeli and Zionist foreign policy:
(1) Creating and sustaining a Jewish territory with a significant Jewish population,
(2) Developing a viable economy,
(3) Finding and retraining major power political support,
(4) Evolving a “never again syndrome,” that is that Jews would never again find themselves unable to defend themselves (military acquisition and developing a nuclear weapon for deterrence),
(5) Evolving a defense policy to offset the asymmetry of Israel’s demographic inferiority and geographically small size as compared to the surrounding hostile Arab population,
(6) Assuring access to water and fossil and other fuels sufficient to sustain the well-being of the state,
(7) Seeking accommodations with neighbors when available and neutralizing regional existential threats.
INDIA VS ISRAEL
Surface Area (Sq. Km.)
IMF, OECD, UN
ACD, BIMSTEC, BRICS, G20, IMF, MGC, UN, SAARC
GDP per capital ($)
Debt (% GDP)
Expenditure ( % GDP)
Exports (M $)
Imports (M $)