Israel Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Israel Country Risk Report
Product Price
$1,195.00

Core Views

  • The entry of right-wing party Yisrael Beitenu in the coalition will bring greater stability to the government led by Prime Minister Benjamin Netanyahu, increasing its chances to complete its term. Nonetheless, it will fuel Palestinian grievances and increases the risks of a renewed intensification of violence in the West Bank and Jerusalem, and of a direct confrontation with Hamas and Gaza. Economic growth will be affected by exports weakness in the short term, but will gradually pick up amid a strong private consumption outlook and an increase in government spending.

Key Risks

  • A delay in the Fed hiking its policy rate would lead to the shekel appreciating sooner than we anticipate. The export sector - which accounts for 35% of GDP - would suffer from a strengthening currency.

  • The ultra-Orthodox push to roll back on reforms implemented in the previous years could lead to the long-term fiscal outlook being significantly weakened in addition to lowering productivity growth in the long-run.

  • The current wave of violence between Israelis and Palestinians could escalate to a conflict between Israel and Hamas, or to a full-scale armed insurrection similar to the first and second intifadas.

Macroeconomic Forecasts (Israel 2014-2017)
Indicator 2014 2015 2016f 2017f
e/f = BMI estimate/forecast. Source: National sources, BMI
Real GDP growth, % y-o-y 2.6 2.5 2.7 3.4
Nominal GDP, USDbn 303.8 296.2 306.0 327.9
Consumer price inflation, % y-o-y, eop -0.2 -1.0 1.1 2.5
Exchange rate ILS/USD, eop 3.90 3.89 3.85 3.75
Budget balance, % of GDP -2.8 -2.1 -3.1 -2.8
Current account balance, % of GDP 3.0 4.4 5.4 5.4
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Export Slowdown Weighing On Economic Activity
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Limited Risk Despite Widening Deficit
11
Structural Fiscal Position
12
TABLE: BREAKDOWN OF PUBLIC REVENUES & EXPENDITURE, % OF TOTAL
12
Monetary Policy
14
Stable Rates In H216 Amid Weak Inflation
14
Monetary Policy Framework
15
Currency Forecast
16
ILS: BOI Support To Contain Appreciatory Pressures
16
TABLE: BMI CURRENCY FORECAST
16
Chapter 2: 10-Year Forecast
19
The Israeli Economy To 2025
19
Robust Growth Prospects As Investment Picks Up
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Stability Gains, But Further Isolation From Enlarged Coalition
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
26
Long-Lasting Peace With The Palestinians Unlikely
26
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Economic Openness
31
TABLE: TOP 5 IMPORT PARTNERS & PRODUCT IMPORTS, USDMN
31
TABLE: FREE TRADE AGREEMENTS
32
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
33
Availability Of Labour
36
TABLE: MENA - AVAILABILITY OF LABOUR RISK
36
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000)
37
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS
38
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Summer Of Risk
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

Assess your risk exposure in Israel with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Israel with confidence.

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