Israel's GDP grows slowly but surely

Israel's GDP grows slowly but surely
Israel's GDP grows slowly but surely

Israel is a small country on the eastern coast of the Mediterranean Sea, formed in 1948 by the decision of the UN. Plans to create a Jewish state in the former British mandated territory were realized thanks to the support of the United States and the Soviet Union. For 70 years, the country has become one of the most successful in the world, with a dynamic high-tech economy. In terms of GDP, Israel ($316.77 billion) is ahead of all its neighbors in the region and ranks 35th in the world (as of 2017).

Almost socialism

Israel at the time of its founding was an agricultural country with a relatively small but modern industrial sector, which during the war years produced weapons using British technology. The mass arrival of Jews from all over the world overwhelmed the economy of the country, which could not cope with the provision of food and basic necessities.

Holiday in Jerusalem

The state in the early years acted almost socialist methods. In Israel, they announced that for the sake of a brighter future, citizens would have to tighten their belts, and introduced a rationing system. State control over the economy, the famous kibbutzim and the card system did not allow the young state to get out of the crisis. Centralized redistribution did not have a significant effect, during these years the "black market" began to flourish.

Thorny path to success

In 1952, thanks to US loans and grants and measures to reduce the influence of the state on the economy, the card system was abolished, and Israel's GDP began to gradually grow. Economic growth ended closer to the mid-1960s, when the inflow of investments decreased and interest rates on loans increased. And until the 80s the country was in a fever - high inflation, unemployment.

spice market

Israel spent a lot of money on defense, as it went through two wars with neighboring Arab countries. Hyperinflation, sometimes in triple digits, was brought under control by "shock therapy": severe restrictions were placed on government subsidies and wage increases. Inflation was brought down to 20% and further reduced to an acceptable level.

Israel Today

Israel is now one of the most technologically advanced countries in the world. The basis of the economy is made up of enterprises in the biotechnological and telecommunications industries. In the structure of Israel's GDP, as in all developed countries, the share of services prevails - 69%, then industry - 27.3% and agriculture.economy - 2, 1%. Traditional export items are high-tech equipment, pharmaceutical products and diamonds. The main imports are crude oil, grain and armaments.

Bridge in Bershevo

Agriculture is one of the most technologically advanced industries in the world. The country is almost completely self-sufficient in food. In the past three years, Israel's GDP grew by about 2.8%, 5% per year in the previous period (2004-2013). The decline in growth rates is associated with a slowdown in domestic and international demand, a decrease in investment due to the uncertain security situation around the country. However, for a country with a fairly developed economy, this is also a good indicator. Israel's GDP per capita in 2017 reached $36,524.49, ranking it 24th in the world.

Foreign economic relations

Israel traditionally has a negative trade balance, the country almost always buys more than it sells. The trade deficit is offset by tourism revenues, service exports and significant foreign investment. The US is Israel's top trading partner for both exports ($17.6 billion) and imports ($13.2 billion).

Solar panels

In addition, the United States provides about three billion annual military technical assistance. Exports are followed by Hong Kong, the United Kingdom and China. In terms of imports after the United States are China, Germany and Turkey. Diamonds are the top export ($15.6 billion) and import ($6.08 billion)dollars).

Cooperation with Russia

Among Israeli citizens, almost 20% of the population know Russian, being emigrants from post-Soviet countries, which creates comfortable conditions for Russian-speaking tourists. After the abolition of visas between countries, tourists from Russia are the second largest after Americans (about 590,000 a year). In 2017, the main imports from Russia were:

  • mineral products (39.31% of total exports);
  • precious stones and metals (31.73%);
  • food and agricultural raw materials (9.8%).

Israel delivered the most to Russia:

  • food products and agricultural raw materials (35.98%);
  • machinery, equipment and vehicles (28.08%);
  • products of the chemical industry (21.79%).

Trade turnover in 2017 between the countries amounted to 2.49 billion dollars, an increase of 13.93% compared to last year.

Bright future

The Israeli economy has all the ingredients for long-term growth. What GDP in Israel will be in the long run depends primarily on three factors: high technology, gas production, military and high-tech industries. The country is a leader in high technology. According to some estimates, it is in second place after the United States. The industry produces more than 50% of industrial output. For a long time, Israel was considered a country without minerals, but in 2009, the Tamar and Leviathan natural gas fields, one of the largest in the world, were discovered.

Israeli drone

Political and legal issues are delaying the development of the Leviathan gas field, but gas production in Tamar is driving Israel's GDP growth by 0.3-0.8%, and is predicted to generate more than 1% in the future. Israel is the sixth country in the world in terms of arms exports with a significant share of high-tech products, including avionics, unmanned aerial vehicles, optical and electronic equipment. Other sources of sustainable growth in Israel's GDP will be water-saving and knowledge-intensive (medical and biotech) production.

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