Israel’s booming high-tech sector led to overall economic growth in 2022, but high interest rates and a weak housing market are expected to cause a slowdown in the coming year.
The year 2022 saw an increase in the country's gross domestic product (GDP) by 6.3%.
Ministry of Finance Chief Economist Shira Greenberg noted that the expected GDP for 2022 has decreased from 3.5% to 3%, similar to forecast set by the Bank of Israel.
The Organization for Economic Cooperation and Development (OECD), an intergovernmental organization established to stimulate economic progress and world trade, expects a slightly lower growth rate of 2.8%.
One official from the Finance Ministry said the high GDP growth projected for 2022 “was backed by a tight labor market with unemployment and participation rates returning to roughly pre-pandemic levels, the strong performance of the high-tech sector and higher than expected tax revenues, leading to a surplus in the government balance for the first time in many years.”
She added that even though the targeted inflation rate for 2022 set by the Bank of Israel had been exceeded, “Israel’s inflation rate is relatively low compared to other countries.”
Eytan Sheshinski, professor emeritus of Public Finance at the Hebrew University of Jerusalem, commented that Israel's economic growth rate of 6.3% was “unprecedented.”
He also explained that between 2021 and 2022, Israel’s GDP rose on average about 4.3% annually, making it the highest average in the OECD. “That’s a very good record,” he added.
Sheshinski said Israel’s high-tech sector is the reason for the steady growth, adding that “the startups that earned $26 billion this year were the real booster of such growth.”
The All Israel News Staff is a team of journalists in Israel.