Israel’s economy is built on a technologically
progressive free market approach.
Diamonds, high-tech equipment, and pharmaceuticals are among top exports.
Its main imports consist of crude oil, raw materials, grains, and military equipment.
Israel usually shows substantial trade deficits, which are counterbalanced by tourism
and other service exports, along with noteworthy inflows from foreign investment.
During 2004 and 2013, growth was more or less
almost 5% per annum, mainly because of the exports.
The worldwide financial catastrophe of 2008-09
incited a brief recession in Israel, nonetheless,
the country got into the crisis with solid ground rules, by following
the years of judicious fiscal policy and a strong banking system.
In the long term, Israel faces organizational issues,
together with low rates of low labor participation for its swiftest rising
social segments including the ultraorthodox and Arab-Israeli groups.
Furthermore, Israel's progressive technology sector
provides employment to just about 8% of the personnel,
with the rest of the majority of the employed
personnel working in manufacturing and service
industry, which faces the pressure of downward wages due to the global competition.
Overheads on educational institutions are low as compared to
most other OECD countries who have similar GDP per capita.
Economic Freedom
The economic freedom score for Israel is 72.2, which
means it is the 31st freest economy in the 2018 list.
There has been substantial developments in government integrity, fiscal health, and
property rights and they easily outdid a drop
in the score for the trade freedom indicator.
Israel has been placed on the 3rd position amongst the
14 countries of the Middle East and North Africa region.
Israel has the strong trade and investment
connections outside of the Middle East which protect
Israel’s technologically forward-looking free-market
economy from regional political uncertainties.
Property rights
In Israel, the proper measures for the protection of property and contractual
rights are in place, and businesses face a low level of risk for expropriation.
The system used for recording the secured interests in property is consistent.
Moreover, Israel’s judicial system is independent and
any form of corruption including bribery is prohibited.
Tax and GDP
In Israel, the rate for top personal income tax is 48
percent and the rate of corporate tax is 25 percent.
The total tax burden is equal to about 31.4 percent of total domestic revenue.
In the past three years, the government spending figure
has been 40.1 percent of the total GDP of the country.
Budget deficits have an average of 2.9 percent of total GDP.
Public debt is about 62.2 percent of GDP.
Trade and Tariff
Trade is important for Israel’s economy and the joint
value of exports and imports is 57 percent of GDP.
The applied tariff rate is 2.2 percent and the nontariff
barriers do slow down some trades in general.
However, the government policies and strategies do
not considerably obstruct the foreign investments.
Financial establishments provide a variety of
services and capital markets are progressing as
part of Israel’s strategies to reinvigorating
itself as a center for the regional financial.
Some concerns
Income disparity and commodity prices are reasons for distress in many Israelis.
In spite of the appeals for reforms, the limited housing supply is still having
an undesirable impact on the security of younger Israelis looking to buy homes.