Everything about the economy of Israel
Everything about the economy of Israel, according to Iran Gate’s report, despite the political and economic crises, Israel’s per capita income is more than twice that of Arab countries in the Middle East. The country’s economy has also grown by 65% in 2022, which is one of the highest growth rates in the world. In other words, residents of occupied territories enjoy the highest level of welfare in the Middle East.
Many believe that after Hamas’ attack on the occupied territories on October 7, 2023, the economy of Israel will no longer flourish. But is this claim true? Israel has one of the most stable and developed economies in Western Asia, especially in the Middle East, and its entry into a serious crisis is beyond the imagination of any economist.
Although some believe that the uncertainty and insecurity created in Israel will strangle the economy of the country and make it even more difficult for Israeli politicians, before making any judgments about the future of Israel’s economy, we must understand its coordinates and dimensions. This report examines the economic situation in Israel as well as the living conditions of its citizens.
Israel is the most developed economy in the Middle East.
The economy of Israel, considered one of the most developed and prosperous economies in the world, is based on the principles of a free market, with much lower government intervention rates compared to other Middle Eastern countries. However, traces of Keynesian policies can also be observed in Israel’s economy, which has its roots in the unique situation that this country faces in the region. Therefore, the Israeli government, at times, operates as a welfare state and prioritizes interventions such as tax collection and expenditure for the public interest.
However, it should not be forgotten that the development of this country, with a population of nine million and a highly integrated Jewish population in the Middle East, has greatly served the consolidation of its security foundations. It should not be forgotten that Israel is the only nuclear power in the Middle East and has one of the most advanced and largest armies in the world.
Based on these same points, Benjamin Netanyahu recently mentioned Israel as one of the scientific references in the field of artificial intelligence in the world at the United Nations General Assembly. This is because the largest active startups in this field are located in Israel and are engaged in extensive activities in the areas of military electronics, medical, and agricultural industries.
Gross Domestic Product (GDP) production
Gross Domestic Product (GDP) is one of the most important indicators for measuring the economic status of countries. Israel, being one of the most developed economies in the world, is no exception to this rule. The World Bank estimates Israel’s Gross National Product (GNP) to be around $560 billion for the year 2023, while it was recorded at over $530 billion in 2022.
GDP per capita in Israel was also recorded at over $57,000 per citizen in 2022. The country’s economic growth was more than 85% in 2021, but experienced a 2% setback in 2022 due to factors such as global inflation and the war in Ukraine. It achieved a growth rate of 65% in 2022. However, it should not be forgotten that political crises were also one of the main reasons for the decline in the extraordinary economic growth trend in Israel in 2022.
However, experts estimate that Israel’s economic growth in the current calendar year will surpass 74%, indicating a significant intensification of economic growth compared to 2022. However, due to the semi-military attack by Hamas militants on the occupied territories in southern Palestine on the border with Gaza, it is expected that this trend will decrease slightly. Nonetheless, the figures so far indicate a noticeable increase in Israel’s economic growth rate.
The growth rates in various sectors of Israel’s economy, including industry, services, and agriculture, have reached 265%, 69%, and 3% respectively in 2022. These statistics indicate the remarkable activity of successful multinational startups and tech companies in this country. As mentioned, over two-thirds of Israel’s economy is dominated by the services sector, which has led to the country being recognized as a major player in this field in the region and even the world.
Inflation and unemployment
The COVID-19 pandemic in the years 2018 to 2021 caused the largest and most developed economies in the world to enter a severe crisis phase. As a result, we witnessed a widespread wave of inflation in the economies of the world in 2020 and 2021. Israel was also among these countries, but it was able to quickly escape from the abyss of global inflation by adopting appropriate monetary policies.
The inflation rate in Israel in the first six months of 2023 has reached about 4%, which is about 22% higher compared to the average inflation rate during the 20-year period from 2000 to 2020. However, these figures should be considered in relation to the two-digit inflation rate in the United States in 2022, as well as the high inflation rates in major world economies, which have been unprecedented in the past 30 years.
The unemployment rate in Israel also reached about 36% in 2022, and the Israeli Ministry of Labor recently reported the existence of about 138,000 unemployed people in this country of 9.5 million. However, the unemployment rate among young people has been about twice as high, so that at the end of 2022, about 6% of the Israeli youth workforce were without any job.
However, it should not be overlooked that Israel has one of the lowest unemployment rates in the world and also has one of the most fertile labor markets among Western Asian and Eastern European countries. This is despite the fact that the coronavirus pandemic has intensified unemployment, especially among Israeli youth, and we are witnessing higher numbers than previous decades in the job market, with approximately 54 million Israelis, or 60% of the country’s population, being employed.
Per Capita Income and Livelihood
As mentioned at the beginning of the report, Israel is known for having the most developed economy in the Middle East. According to statistics recorded in 2022, the per capita income of residents in the occupied territories is approximately $38,000. This has led Israelis to experience one of the highest levels of welfare compared to citizens of other countries in the region.
According to a report published by the International Labour Organization (ILO) in 2020, about 9% of residents in the occupied territories are considered poor. Among them, approximately 25% face absolute poverty, mainly among Arabic-speaking Israeli citizens. This is in contrast to the average poverty line in the Middle East, which is over 27%, making it incomparable to the situation in Israel.
The average income in Israel has a nearly 100% gap compared to 16 Arab countries. The average monthly income in the 16 Arab countries in the region was recorded at around $1,200 in 2022, while the same indicator for Israeli citizens is over $2,500 per month. The per capita GDP of Arab Middle Eastern countries in 2022 is about half of Israel’s.
Is oil a weakness or strength for Israel?
All these numbers indicate a deep gap between Israel’s economy and other countries in the region. It should be noted that except for countries like Lebanon, Syria, and Yemen, other Arab Middle Eastern countries benefit from a desirable economic situation. Economic indicators also show a sustainable prosperity in these countries, including Saudi Arabia, Qatar, the United Arab Emirates, and even Egypt. However, the point here is that Israel’s economy is classified among developed economies due to various reasons, including its fertility and dynamism.
However, the Arab countries mentioned without exception rely heavily on oil money and are not recognized as developed economies for this reason. That is why many economists believe that Israel’s non-utilization of oil resources in the occupied Palestinian territories has created an extraordinary opportunity for the country to move towards economic prosperity and dynamism.
It should not be forgotten that Israel is the only economy in the region that possesses all the factors of a free economy. Experts also refer to Israel as the only democracy in the Middle East. All these factors have contributed to Israel being recognized as the most developed economy in the West Asia and North Africa region.
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