Overview: Israel has a market economy with substantial government participation. It depends on imports for crude oil, food, grains, raw materials, and military equipment. Despite limited natural resources, Israel has developed its agriculture and industry sectors on an intensive scale over the past 20 years. This policy has transformed the economy into that of a modern industrial and service-oriented state. Industry accounts for about 23% of the labor force, agriculture for 6%, and services for most of the balance. Diamonds, high-technology machinery, and agricultural products (fruits and vegetables) are the biggest export earners. The balance of payments has traditionally been negative, but is offset by large transfer payments and foreign loans. In September 1988 nearly two-thirds of Israel's $16 billion external debt was owed to the US, which is its major source for economic and military aid. In order to earn needed foreign exchange, Israel must continue to exploit high-technology niches in the international market, such as medical scanning equipment. In 1987 the economy showed a 5.2% growth in real GNP, the best gain in nearly a decade; in 1988 the gain was only 1%, largely due to the economic impact of the Palestinian uprising (@m5intifadah). Inflation dropped from an annual rate of over 400% in 1984 to about 16% in 1987-88, without any major increase in unemployment.

GNP: $36 billion, per capita $8,400; real growth rate 1% (1988)

Inflation rate (consumer prices): 16% (1988)

Unemployment rate: 8% (March 1989)

Budget: revenues $23.5 billion; expenditures $23.3 billion, including capital expenditures of NA (FY87)

Exports: $9.4 billion (f.o.b., 1988); @m5commodities--polished diamonds, citrus and other fruits, textiles and clothing, processed foods, fertilizer and chemical products, military hardware, electronics; @m5partners--US, UK, FRG, France, Belgium, Luxembourg, Italy

Imports: $12.9 billion (c.i.f., 1988); @m5commodities--military equipment, rough diamonds, oil, chemicals, machinery, iron and steel, cereals, textiles, vehicles, ships, aircraft; @m5partners--US, FRG, UK, Switzerland, Italy, Belgium, Luxembourg

External debt: $16 billion (September 1988)

Industrial production: growth rate - 3% (1988)

Electricity: 4,192,000 kW capacity; 17,317 million kWh produced, 4,030 kWh per capita (1988)

Industries: food processing, diamond cutting and polishing, textiles, clothing, chemicals, metal products, military equipment, transport equipment, electrical equipment, miscellaneous machinery, potash mining, high-technology electronics, tourism

Agriculture: citrus and other fruits, vegetables, cotton, beef and dairy products, poultry products; a world leader in irrigation techniques

Aid: recipient--of which, $3.6 billion annually in US official military and economic aid

Currency: new Israeli shekel (plural--shekels); 1 new Israeli shekel (NIS) = 100 new agorot

Exchange rates: new Israeli shekels (NIS) per US$1--1.8157 (January 1989), 1.5992 (1988), 1.5946 (1987), 1.4878 (1986), 1.1788 (1985)

Fiscal year: 1 April-31 March

NOTE: The information regarding Israel on this page is re-published from the 1989 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Israel Economy 1989 information contained here. All suggestions for corrections of any errors about Israel Economy 1989 should be addressed to the CIA.