Looking at Israel- Economy

After having enjoyed for many years one of the fastest GDP growth rates of all world economies, Israel is now continuing the economic recovery that began in 2003, after a two-year slow-down in almost all economic activity. In 2006, Israel's GDP rose by 5.1%, in spite of the Second Lebanon War, which caused a temporary loss of 0.7% of the GNP. The speedy recovery and the continuation of rapid growth were led by the business sector, which expanded by 6.4%, resulting in a per capita GDP of about $20,000 in 2006.

The country's most remarkable economic achievement in the 60 years of its existence is the rate at which it has developed, while simultaneously dealing with four major challenges: maintaining national security, which now accounts for some eight percent of the GDP (in contrast to over 25% in the 1970s); absorbing large numbers of immigrants - the raison d'etre of the Jewish state (over three million - a five-fold increase - since its inception in 1948 ); establishing a modern infrastructure to meet the requirements for economic growth; and providing a high level of public services.

The price for this impressive growth has been, until recently, a deficit in the balance of payments. In 2006, for the first time, exports surpassed imports. Foreign debt has been eliminated, with Israel becoming a creditor in recent years. In 2006, Israeli continued to achieve its main macroeconomic objectives: a very low, sometimes even negative rate of inflation (down from 445% in 1984!), a very low budget deficit, and a limited increase in public expenditure. Israel has also proven to be very attractive to international investors.

AGRICULTURE. Israel has become a world leader in quality, high-yielding agriculture, with farmers and researchers cooperating in developing and applying sophisticated science-based methods in all agricultural branches.

Locally designed and manufactured machinery and electronic equipment are widely used in farming activities, from irrigation and harvesting to milking and packing.

Making maximum use of scarce water and arable land, Israel produces more food than it needs for its own use. Imports include mainly grain, meat, tea, coffee, rice and sugar, while it exports much more, with long stemmed roses, spray carnations, melons, kiwis, strawberries, tomatoes, cucumbers, peppers and avocados among the most successful, especially in European and American markets during the cold winter months.

INDUSTRY. The industrial sector is dynamic and widely diversified. Industrial exports have steadily risen from $52 million in 1955 to $39.4 billion in 2006.

Lacking most basic raw materials but endowed with a high-quality labor force, Israel's industry has concentrated on manufacturing products with a high added value, based on scientific creativity and technological innovation. Over 4% of Israel's GDP is spent on civilian research and development (R&D).

International-level strides have been made in the fields of medical electronics, agrotechnology, telecommunications, fine chemicals, computer hardware and software, food-processing and solar energy. Hi-tech industries, which accounted for only 37% of industrial product in 1965, grew to 70% in 2006 ($29 billion plus another $5.9 billion of hi-tech services). Almost 80% of hi-tech products are exported.

In addition, the country's diamond cutting and polishing industry is the largest in the world; in 2006, $13 billion worth of stones was exported.

FOREIGN TRADE. Trade is conducted with countries on six continents. Some 49 percent of imports and 33 percent of exports are with Europe, boosted by the free-trade agreement which Israel concluded with the European Union (EU) in 1975. Israel has a similar agreement, updated in 1995, with the United States, which  accounts for 12.4 percent of Israel's imports and 38 percent of its exports.

TOURISM. Over 1.8 million people from all over the world visited Israel in 2006, for its archeological and religious sites, well-developed tourist facilities and fine beaches on the Mediterranean, Dead and Red Sea coasts, as well as around Lake Kinneret (the Sea of Galilee). Some 54 percent of this influx of tourists came from Europe, 33 percent from the Americas and 8 percent from Asia.

CURRENCY. The unit of currency is the shekel (divided into 100 agorot), known as a unit of weight for means of payment in gold and silver as early as the second millennium BCE. It is recorded in the Bible that Abraham's servant approached Rebecca at the well with "a golden earring of half a shekel weight, and two bracelets for her arms of ten shekel weight in gold/" (Genesis 24:22).

LABOR AND EMPLOYMENT. Extensive legislation exists for the protection and welfare of workers. Minimum requirements are anchored in law, including a maximum 47-hour work week, compensation for overtime and holiday work, paid annual vacation and sick leave, as well as severance payments and pension plans.

Wages and specific working conditions in the various economic sectors are set forth in agreements negotiated between the government (as a major employer), the various trade unions and the organizations of employers.