Israel’s economy is expected to continue growing in the next couple of years, albeit at a slightly slower rate, according to a report released Thursday by the Organisation for Economic Cooperation and Development.
Israel’s economic growth is forecast to “ease slightly, but will remain close to 3% in 2020 and 2021,” the OECD said in its Economic Outlook projections report.
“Growth remains robust and close to the potential rate,” the OECD said. “Industrial production remains resilient. Business and consumer confidence remain solid despite prolonged political uncertainty.”
“Growth could be stronger if a faster-than-assumed development of the gas fields further reduces energy imports or boosts exports,” the report wrote of Israel’s offshore Mediterranean natural gas resources and a lucrative deal to supply Egypt.
“In contrast, continued shekel appreciation and heightened geopolitical tensions would hurt growth,” the OECD said.
“The global slowdown is weakening exports” for Israel, “and private consumption growth will moderate as the labor market cools slightly, but low interest rates and the start of gas exports will support activity,” the report said.
World Gross Domestic Product (GDP) is predicted to slow to 2.9%-3.0% in 2020 and 2021, according to the OECD assessment, which described the global outlook for the coming two years as “unstable.” World GDP expansion was 3.5% in 2018.
The OECD further found that Israel’s general government budget deficit had “increased markedly” from 1.1% of GDP in 2017 to a projected 4.1% in 2019, which it said was due to “strong increases in expenditures” alongside the lowering of some tax rates. The deficit was predicted to drop to 3.6% by 2021.
Unemployment, which in 2019 is at 3.9% — close to “its historical low” — was predicted to climb to 4.3% by 2021.
Israel has been gripped in a political deadlock which, despite two rounds of elections within six months, has failed to produce an elected government. With the failure so far of coalition building efforts following the last elections in September, the country appears to be heading for a third election in early 2020 unless last-minute negotiations can produce a unity government.