OECD Optimistic on Israel Economic Growth

The OECD has significantly raised Israel’s GDP growth forecast in its latest economic outlook, reflecting the country’s success in coping with the pandemic, Globes reported on Wednesday.

According to the OECD report, Israel’s GDP growth will be 6.3% in 2021, up from 5% in its last forecast. Not as optimistic as Israel’s Ministry of Finance prediction of over 7% in 2021, but still encouraging.

The OECD also forsees growth of 4.9% in Israel in 2022, up from 4.5% in its previous forecast, and growth of 4% in 2023.

The OECD wrote, “The progressing booster vaccination campaign, a gradually recovering labor market and fading uncertainty will support domestic demand. Strong growth of high-tech services exports will continue.”

But the positive outlook came with the inevitable caveats: “The recovery could be slower if the health situation deteriorates again, or the increase in inflation is stronger or more persistent than assumed in the projections. Growth could be stronger if accumulated savings are withdrawn more quickly.”

The OECD advised that “the withdrawal of policy support should be gradual, given still substantial uncertainties about the outlook. Support should focus on helping the unemployed transition to new jobs. The government adopted an ambitious reform program in August 2021, including measures to boost infrastructure investment and improve the business environment. Timely and effective implementation of the program would strengthen productivity and make the recovery more sustainable.”