Israel Business Overview

Business and Economic Overview

Israel has enjoyed strong economic fundamentals in recent history and the economy has proved to be flexible and adaptable. Unemployment  and inflation are low; the latter is currently at 0.2% it is forecast to remain below 2% through 2022.[1]

Public debt remains fairly high at 62.2% of GDP and the fiscal deficit is expected to widen in 2018 owing to greater public spending, although the current account is expected to continue to be in surplus.[2]

Overall the economy is technologically advanced, with a highly skilled workforce and numerous research and development centres and technological start-ups have found success in the Israeli economy. As such, Israel is ranked 54 of 190 in the World Bank’s Doing Business index and 37 of 190 in the Starting a Business Index.[3]

Nevertheless, the cost of living is high, and monopolies dominate some sectors, whilst the Israeli government often adopts trade restrictions which favour domestic producers.

Meanwhile owing to the developed nature of the economy companies will face significant local and international competition. The geopolitical and security situation in the region is also tense.

The developed nature of the Israeli economy, however, makes it attractive and low risk for investors and entrepreneurs. Industry is dominated by high-tech products and the workforce is largely highly skilled and educated, mirroring Western nations.[4]

Furthermore, Israel has several free trade agreements, including with the EU. Israel has recently discovered large amounts of natural gas in the Tamar and Leviathan fields in the Western Mediterranean. Furthermore, oil may also be discovered underneath these gas fields. As such, there are extensive pipeline infrastructure networks being built, providing ongoing opportunities for suppliers and engineering consultancy, and as new fields come online, opportunities may arise in extraction of natural resources.[5]

Renewable energy is also a severely underexploited source of power within Israel. Opportunities also exist in education, particularly focused on the energy industry as Israel has few formal education programmes focused on energy extraction and development.

Given the high-tech nature of the economy, joint R&D programmes with Israeli firms are constantly arising across a wide range of sectors, particularly the aerospace and defence industry.[6]

References

[1] http://www.imf.org/external/datamapper/PCPIPCH@WEO/ISR.

[2] http://www.coface.com/Economic-Studies-and-Country-Risks/Israel.

[3] http://www.doingbusiness.org/data/exploreeconomies/israel.

[4] http://www.coface.com/Economic-Studies-and-Country-Risks/Israel.

[5] https://www.gov.uk/government/publications/exporting-to-israel/exporting-to-israel; https://www.export.gov/article?id=Israel-Energy.

[6] https://www.export.gov/article?id=Israel-Educational-Services.