Israel's Economy
Fitch* affirms Israel at 'A+'; outlook stable
On August 14, 2023, Fitch Ratings reaffirmed Israel’s A+ rating with a stable outlook, noting that “Israel retains strong financing capacity with strong demand for government bonds from domestic investors, a diversified global investor base and active Diaspora bonds market.” The report highlighted the country’s “diversified, resilient and high value-added economy and strong external finances” and went on to point out that maintaining Israel’s credit rating was supported by “strong external finances.” (*Israel bonds are not rated.)
S&P* reaffirms Israel’s AA- rating, cites Israel’s “wealthy and diversified” economy
Standard & Poor's (S&P) has kept Israel’s favorable rating* unchanged at AA- with a “stable” outlook, in its latest analysis. The global ratings agency said Israel’s stable outlook “balances elevated regional and domestic political risks,” among them the judicial overhaul plans, “against the country’s resilient economy, strong balance of payments, and a moderate level of public debt.” The agency cited Israel’s credit strengths including its “wealthy and diversified economy,” its “flexible monetary settings and a relatively deep pool of domestic savings,” but said credit ratings are “constrained by persistent domestic and regional political and security,” The Times of Israel reported on May 13, 2023. (*Israel bonds are not rated.)
Moody's* affirms Israel's A1 rating and changes outlook from 'positive' to 'stable'
On April 14, 2023, Moody’s Investors Service affirmed the Government of Israel’s A1 rating.
“The affirmation of the A1 ratings reflects Israel's strong economic growth and improving fiscal strength which Moody's expects to continue. The economy has proven resilient to many economic and geopolitical shocks over the past decades and has grown at a rapid clip, helped by Israel's globally competitive high-tech industries. Also, Israel's fiscal and debt metrics have improved rapidly after the pandemic-induced temporary shock, with the public debt-to-GDP ratio declining by ten percentage points of GDP within two years to 60.7% of GDP in 2022. Last year, the government recorded a budgetary surplus of around 0.6% of GDP, helped by strong revenue growth and contained expenditure growth as most pandemic-related spending ended.”
In addition, Moody’s changed the government of Israel’s outlook to ‘stable’ from ‘positive’. The change in outlook is a result of recent events surrounding the country’s proposal to change the country’s judiciary.
(*Israel bonds are not rated.)
Fitch* affirms Israel’s A+ rating with stable outlook
On March 1, 2023 Fitch ratings agency reaffirmed Israel’s A+ rating with a stable outlook, highlighting the country’s “diversified, resilient and high-value added economy” in its latest report. The agency went on to note that maintaining Israel’s credit rating was also supported by “strong external finances against a high government debt/GDP ratio, elevated security risks, and a record of unstable governments that has hindered policymaking.”
Fitch expects Israel’s economy to grow at rate of 2.9% in 2023, despite global challenges and monetary policy tightening that will curtail private consumption and investment, and anticipates the economy will return to growth above 3% in 2024 and 2025 backed by exports from the high tech and the defense industries, strong population growth and increased government spending. (*Israel bonds are not rated.)
Israel's GDP grows 6.8% in Q2, defying expectations of an economic slowdown
Israel's economy rebounded in the second quarter of 2022, with gross domestic product growing at an annualized 6.8%, led by double-digit gains in exports and consumer spending - contradicting forecasts of a slowdown after a 2.7% contraction earlier this year, the Central Bureau of Statistics reported on August 16, 2022.
Boston-based private equity firm acquires Israel-rooted Forescout Technologies Inc. in $1.9 billion deal
Founded in Israel two decades ago, the California-headquartered cyber company with a research and development center in Tel Aviv, develops and markets software for monitoring organizational networks that carry multiple devices, and employs over 1,100 people worldwide, 250 of which are in the Jewish state. The acquisition by Advent International Corp. was reported in CTech by Calcalist on February 6, 2020.
Israel raises $3 billion in record US dollar bond* issue, with demand reaching an all-time high of $20 billion
On January 8, 2020, the government sold $2 billion of 30-year US-denominated bonds* at 3.375%, or 115 basis points over comparable US treasuries, and another $1 billion of 10-year bonds* at 2.5%, or 68 basis points over treasuries — the lowest-ever spreads for an Israeli international debt offering, The Jerusalem Post reported. Demand for the issues attracted more than 400 different investors from 40 countries, including the United States, Britain and Germany, as well as from Asian institutional investors in Japan and Hong Kong. Central banks, pension funds, insurance companies and other entities that already hold Israeli securities were amid the buyers. Accountant General Rony Hizkiyahu concluded that Israel is well established in global financial markets and that the results are a reflection of confidence in the nation's economy and its bonds* among the world's top investors, adding, “The level of issuance and the low cost achieved will constitute an important element in financing the government’s activities in the coming year.”
*The bonds sold as part of this offering are not those offered by Development Corporation for Israel; different purchase requirements and rules apply.
Israel's economy grew 3.6% in the first half of 2019
Israel’s economy rose by 3.6% in the first half of 2019, according to Israel's Central Bureau of Statistics’ second estimate of national accounts data. The half yearly growth figure, a strong indicator of the Jewish state's economy, compares with 2.8% in the second half of 2018 and 3.5% in the first half of 2018, Globes reported on September 16, 2019.
Israeli high-tech companies raise record amount in first half of 2019
In an all-time high, Israeli high-tech companies raised $3.9 billion in the first half of 2019 with 254 deals. Continuing the success, IVC Research Center findings showed a record-setting second quarter achievement of $2.32 billion, boosted by 10 mega-deals. Adv. Shmulik Zysman, managing partner & high-tech industry leader ZAG/Sullivan stated, “Just when we thought the investment growth in the first quarter of 2019 had broken every record, along came the second quarter and registered the most significant leap in the total amount raised in the last six years,” The Jerusalem Post reported on July 18, 2019.
Israeli-founded companies are making a substantial impact on New York’s economy
New York-Israel Business Alliance noted that Israeli-founded companies are making a substantial impact on New York’s economy – driving $18.6 billion in revenue last year alone. Factoring in spending on local goods and services, the benefit to New York is estimated at $33.8 billion, representing 2.02 percent of the state’s GDP. Between 2014-2016, Israeli companies secured $3.5 billion in venture capital funding and were responsible for more than 20 percent of the total capital raised in New York State in 2016. These Israeli-based companies, over 500 according to the data, employ nearly 25,000 New Yorkers and indirectly employ over 25,000 more when accounting for additional demand for local goods and service. “New York has become the hub where Israelis are transforming Start Up Nation into Scale-Up Nation,” New York-Israel Business Alliance founder Aaron Kaplowitz tells NoCamels reported on July 25, 2019.
Israel’s economy expanded at its fastest pace since 2016
Bloomberg reported on May 17, 2019 that Israel’s economy expanded at its fastest pace in three years last quarter, far exceeding all analyst forecasts. GDP rose 5.2% from the previous quarter, surpassing every estimate in Bloomberg’s survey of six economists, whose median was 3.1%. “The breakdown was very positive, so you’re running on all pistons,” said Leader Capital Markets Ltd. economist Jonathan Katz. “The Bank of Israel will now have to say that in Israel there are signs of growth above potential.”
Candy giant Mars and Jerusalem Venture Partners are teaming up to build a food tech research hub In Israel
Mars, the $35 billion maker of M&Ms, Snickers and Iams pet food, and Jerusalem Venture Partners are creating a research and development center in Israel dedicated to scaling and commercializing tech solutions that touch any aspect of the global food system, from farming to nutrition. The research center – the first Mars has opened in Israel - will give funds to Israeli startups and work with academic researchers at institutions, such as the Hebrew University, the Weizmann Institute, the Technion, Migall and Tel Hai College, Forbes reported on May 15, 2019.
Amazon finalizes deal to buy Israeli startup CloudEndure for $200 million
CloudEndure, which provides business continuity software solutions for disaster recovery, is not the first or the biggest Israeli acquisition by the e-commerce giant. In 2015, Amazon acquired Annapurna Labs for $360 million, which became the center for developing chips used by Amazon Web Services, its cloud-computing unit. Additionally, Amazon also has a smaller research and development unit in Israel working on its cashierless supermarkets, as well as another group working on computer vision for smart speakers. This most recent deal in Amazon’s storied past with Israel has been finalized in January 2019 and is expected to be promptly announced, according to Haaretz.
U.S.-Israel fund to invest $7.3 million in new joint innovation projects
The Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation approved funding of eight new projects in January 2019 to be jointly developed by U.S. and Israeli companies, according to The Times of Israel. New investments will include educational and agricultural technology, energy, digital health, medical devices, and homeland security. “It’s satisfying to see how varied are the projects submitted to the BIRD Foundation with diversity in sectors, size of U.S. companies and their geographical location, enhancing BIRD’s impact, for mutual benefit of the U.S. and Israel,” said Phillip Singerman, associate director for Innovation and Industry Services at the U.S. National Institute of Standards and Technology and co-chairman of BIRD’s board of governors, following the announcement.
Israel is outperforming Europe and the OECD with accelerating growth
The nation's gross domestic product has been rising at an average annual rate of 3.69 percent since 2000, inflation has been negligible at 1.57 percent, and unemployment has fallen to half of its average for the period of 7.4 percent.
With a population of 8.4 million people, the Jewish state has outperformed its European counterparts. Israel’s GDP growth of 69 percent, since being upgraded it to developed-market status in 2009, is more than 17 times what Austria accomplished and almost three times what Switzerland achieved, according to data compiled by Bloomberg and highlighted in an op-ed entitled 'Israel’s Economy Is Too Strong to Argue About' on January 24, 2019.
Israel ranked as world’s fifth-most innovative economy in the 2019 Bloomberg Innovation Index
The Jewish state moved up five spots from last year and surpassed Singapore, Sweden and Japan in the process. After the index was published on January 22, 2019, Israeli Prime Minister Benjamin Netanyahu tweeted, "Israel is a rising global power!"
The Government of Israel raised a record €2.5 billion ($2.88b.) - its largest ever - in the global debt capital markets
On January 9, 2019, peak demand for the bonds was worth about €15 billion ($17.3b.), the most for a euro-denominated issuance. Over 300 investors from 30 countries, including Great Britain, Germany and France, participated in the groundbreaking deal. Consequently, Israel became the first nation in 2019 to announce a mandate for a euro-denominated issuance. Following the trailblazing circulation, Accountant General Rony Hizkiyahu said, “The long bonds – a set for 10 years and a set for 30 years issued for the first time in euros – attests to the confidence of foreign investors in the Israeli economy.” Finance Minister Moshe Kahlon added, “The Israeli economy is enjoying excellent years of high growth, full employment and a low debt-to-GDP ratio,” The Jerusalem Post reported.