Economy in Israel, Israel Business - Allo' Expat Israel
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Israel Economy
 
 
 
 
 

General

The economy of Israel is based on both state and private ownership and operation. Despite adverse conditions, agriculture in Israel has been developed successfully, largely by extensive irrigation to compensate for the shortage of rainfall. Agricultural exports include citrus fruits, cut flowers, non-citrus fruits and vegetables. Other sizable crops are cotton, wheat, barley, peanuts, sunflowers, grapes and olives. Poultry and livestock are raised. Agricultural production adds up to roughly 5% of Israel's gross national product and of its exports.

Most of the land (apart from the land belonging to non-Jews) is held in trust for the people of Israel by the state and the Jewish National Fund. The latter was set up in 1901 to buy land in Palestine for Jews to cultivate, and now implements a wide range of forest and land development activities. The Israel Land Authority leases the land to kibbutzim, which are communal agricultural settlements; to moshavim, which are cooperative agricultural communities; and to other agricultural or rural villages.

The major industries include the cutting and polishing of diamonds and the manufacture of chemical fertilisers, apparel, and military and electronic equipment. High-technology industries are Israel's fastest-growing businesses, with emphasis on computers, software, telecommunications, biotechnology and medical electronics. A number of light industries produce processed foods, precision instruments and plastic goods. The Dead Sea has minerals of commercial value, such as potash, magnesium, bromine and salt.

Another major industry is tourism, which is one of Israel's largest sources of revenue. The government decided to privatise El Al, Israel's international airline, in 1998. Two nuclear reactors exist: one near Tel Aviv, and another near Dimona in the Negev, the site of research on using atomic energy for the production of electricity and the desalination of seawater. Dimona has also been credited with nuclear weapons capacities.

Processed diamonds, high-technology and military products, and agricultural products are the major exports, followed by chemicals, pharmaceuticals, textiles and apparel. The leading imports are military equipment, machinery, rough diamonds, crude oil, chemicals, transport equipment, iron and steel, and cereals. Although Israel imports more than it exports, the balance of trade is far more favourable now than it was in the early years of the state. Israel's chief trading partners are the United States and nations in the European Union, especially Britain and Germany.

Overview

Economy - overview:
Israel has a technologically advanced market economy with substantial, though diminishing, government participation. It depends on imports of crude oil, grains, raw materials and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Israel imports substantial quantities of grain, but is largely self-sufficient in other agricultural products. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, which is its major source of economic and military aid. The bitter Israeli-Palestinian conflict; difficulties in the high-technology, construction and tourist sectors; and fiscal austerity in the face of growing inflation led to small declines in GDP in 2001 and 2002. The economy rebounded in 2003-05, growing at a 4% to 5.2% rate each year, as the government tightened fiscal policy and implemented structural reforms to boost competition and efficiency in the markets. The conflict with Lebanon in summer 2006 slightly dampened GDP growth, but continuing strong foreign investment, tax revenue and private consumption levels helped the economy recover quickly.

GDP (purchasing power parity):
$170.3 billion (2006 est.)

GDP (official exchange rate):
$140.3 billion (2006 est.)

GDP - real growth rate:
4.8% (2006 est.)

GDP - per capita (PPP):
$26,800 (2006 est.)

GDP - composition by sector:
agriculture: 2.6%
industry: 30.8%
services: 66.6% (2006 est.)

Labour force:
2.6 million (2006 est.)

Labour force - by occupation:
agriculture, forestry, and fishing 1.8%, manufacturing 15.7%, construction 5.3%, wholesale and retail trade 12.9%, transport, storage, and communications 6.3%, finance and business 16.9%, personal and other services 11.5%, public services 28.6% (1996)



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