Israel’s economy grew 1% in 2024, exceeding estimates, but high-tech exports plunged 36.8%
The Israeli economy's growth surpassed forecasts, while GDP per capita declined by 0.3%. Despite resilience in domestic consumption, high-tech exports plummeted, and overall exports fell 5.6%, reflecting the war's economic toll.
Israel's gross domestic product (GDP) grew by 1% in 2024, the Central Bureau of Statistics (CBS) announced on Monday. The report shows that business output declined by 0.6%, while GDP per capita fell by 0.3%. In terms of GDP components, 2024 saw a 5.6% decrease in exports, a 5.9% decline in fixed asset investments, a 3.9% rise in private consumption, and a 13.7% increase in public consumption. Additionally, the CBS announced that the unemployment rate fell to its lowest level since the COVID-19 pandemic.
The significance of the data is twofold. On one hand, Israel’s standard of living continued to decline this year, following a 0.1% drop in GDP per capita in 2023. On the other hand, the Israeli economy has demonstrated impressive resilience and a strong recovery from the war. Once again, actual economic performance has exceeded forecasts. The Bank of Israel had projected GDP growth of 0.6% for 2024, while the Ministry of Finance estimated growth at just 0.4%.
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IDF activity in the e Philadelphi Corridor during Gaza War
(IDF Spokesperson's Office)
Regarding the last quarter of 2024, the CBS reported a relatively strong performance, with annualized growth of 3.1% in business GDP, 2.5% in total GDP, and 1.5% in GDP per capita. Fixed asset investments rose sharply by 14.7% during the quarter. The CBS also revised its third-quarter data upward, now reporting annualized growth of 5.3%, compared to its previous estimate of 4%.
The report further shows that private consumption increased by 3.9% in 2024, following a 1.2% decline in 2023. However, when looking at current private consumption per capita—covering expenditures on food, beverages, tobacco, personal services, housing, fuel, and industrial products—the increase was only 0.7%. The sharpest rise in private consumption was in 'semi-durable goods' (such as clothing, footwear, home textiles, small household tools, and leisure products), which saw a 12.2% increase, following a steep 14.6% decline in 2023.
Public consumption rose significantly this year, increasing by 13.7% compared to 2023. This surge was primarily driven by defense spending, which jumped 43.3% year over year, reflecting the direct economic costs of the war.
Fixed asset investments fell by 5.9% in 2024, following a 1.8% decline in 2023. As a result, overall investment levels remain low compared to pre-war levels. The sharpest drop was in residential construction, which declined by 17.5% after an 8% decrease in 2023. Meanwhile, investments in ICT equipment rose by 20.1%. Although this might seem like an encouraging figure, the CBS clarified that the increase was largely due to higher purchases of security equipment. Investment in intellectual property products grew more modestly, rising by 2.6% in 2024.
Exports fell by 5.6% in 2024, following a 1.1% decline in 2023. Industrial exports dropped by 3.9% after a 2.2% decline in 2023. The steepest decline was seen in the tourism sector, where exports plummeted by 67.4%. High-tech exports also suffered a severe blow, falling by 36.8% this year. Meanwhile, diamond exports dropped by 20.3%. When excluding diamonds and high-tech, total exports declined by 4.6% in 2024, whereas in 2023, this index remained stable compared to 2022.
