A Picture of the Nation 2023: Macro-Economic Trends

The Israeli economy has largely remained resilient and has recovered from the COVID-19 pandemic, not all of its components have done so fully though. The share of high tech workers in the labor force is increasing (despite recent downturns in demand by some firms), and wage gaps between those in high tech and those in other industries continue to widen. Part of the inequality stems from a lack of private and public capital in Israel, and the resultant low productivity prevalent among nonhigh-tech workers. This is discussed in this section along with a comparison of Israel to other high-income countries in terms of price increases and price levels. The government’s intention to legislate far-reaching judicial reforms has created considerable economic uncertainty. Among other consequences, this uncertainty has manifested itself during the first months of 2023 in a 6% devaluation of the Israeli shekel. While neither Moody’s nor Fitch have changed Israel’s credit ranking, both agencies, as well as the OECD and the IMF, have expressed concerns regarding the planned legislation as well as the absence of broad consensus about the proposed constitutional reforms. The coming months and years will show us the extent to which these concerns are justified