​Summary:

  • The trends of rapid growth and falling unemployment rates that typified the Israeli economy in 2004 and 2005 continued in 2006.  
  • The economy's ambient conditions improved and the macroeconomic policy allowed them to find full expression.  
  • The hostilities in the north dealt economic activity only a temporary and relatively minor blow-for reasons including the healthy state of the economy before the hostilities started.  
  • As growth persists, the contribution of the cyclical element has contracted ,and that of long-term factors, especially improvements in the production process, has increased. Total factor productivity has improved perceptibly since the beginning of the decade after stagnating in the 1990s, despite its decline in the years of recession.  
  • The combination of a higher national savings rate and a lower gross domestic investment rate brought about a large and aberrant surplus on balance-of-payments current account.  
  • The growth rate of manufacturing output accelerated, mainly due to an upturn in exports. In the past three years, manufacturing industries' exports have been powered by high-tech and innovative products, which are human-capital intensive.  
  • Construction activity edged upward but housing starts declined due to an increase in the prices of raw material, an upturn in construction workers' wages, and continued sluggish demand in most parts of the country.  
  • GDP per worker in Israel is on a par with the OECD average but falls short of the US level. Israel's per capita GDP is under the OECD average, mainly due to its relatively low participation rate in the labor force.  


GDP, Productivity, and the Principal Industries - Full File