Growth was moderate in 2013 and real GDP was estimated to have grown at 3.4% during the year. Israels’s growth rate averaged about 4% during the last few years and its per capita real GDP has grew at a faster pace than most OECD countries. Yet there are concerns on the overall growth momentum slowing . Exports are slowing, house prices are increasing and public debt, which constitutes 68% of GDP, suggest an economic slowdown is imminent. Israel, however, continues to enjoy low unemployment and low inflation. Food and housing prices have increased and an absence of demand pressures working along with an appreciation of the domestic currency and some deregulation measures adopted have helped contain inflation. Israel’s limited financial links to the rest of the world reduces the impacts of the global slowdown on its economy. Growth for 2014 is expected to be moderate with GDP (excluding gas) forecast to grow at 3.1%, subject to no significant political crises or dramatic exchange rate fluctuations.
Israel is a global leader in the high technology sector, which is fueled by research and development funded at a level of 5% of GDP. About 80% of Israel’s high technology products are for export. Israel is home to four of the top computer science research universities in the world and is a leading supplier of software, desalination devices, sensor technology, robotics, microprocessors and semiconductors. Israel, by virtue of its highly skilled workforce (140 Israelis per 10,000 work in technology fields) has also attracted substantial investments by companies like Intel, Google, Microsoft, Cisco and Apple. Berkshire Hathaway made its first investment outside the United States when it purchased 80% of ISCAR Metalworking for $4 billion. Israel has the world’s highest per capita number of scientists, engineers and technicians. Israel’s energy sector is poised for growth as it shifts from spending over 5% of its GDP on imports to exploiting recently discovered gas fields worth an estimated $240 billion. Israel is also a major polished diamond producer though exports fell dramatically in 2012 due to the global financial crisis. Israel has long developed advanced military technology as a way to stave off existential threats and galvanize its economy and currently produces more than 10% of world armament exports, providing revenues of $3.5 billion annually. Israel leads the world in unmanned aerial drone sales, controlling about 41% of the market. Israel remains a perennial tourist destination as it is home to religious and historical sites as well as resorts. More than 3.5 million tourists per year travel to Israel to visit holy places, beaches and more museums per capita than any other country.
Israels doing business ranking (35 out of 189 economies) improved by four places in 2014. The main reason for Israels improvement is that starting a business (35) now takes an average of two weeks, compared to an average of three weeks in 2013. Israel is one of the worlds best at protecting investors (6) and getting credit (13). Israels worst performing indices include dealing with registering property (151), construction permits (140) and getting electricity (103).