Market Overview

• Israel’s GDP growth in 2008 dropped slightly to 4.1%, largely as a result of the global economic slowdown. Growth during the first half of the year was 4.9% and 1.8% during the second half. This follows three years of strong growth, including 6% in 2007; 5.1% in 2006 and 5.2% in 2005.
• Israel’s GDP per capita in 2008 was $27,300.
• Israel’s GDP per capita grew in 2008 by 2.2%, down from 2007’s 3.5% growth and 2006’s 3.3%.
• Israel’s 2008 Inflation rate during the first 3 months of 2008 was 3.9%. This follows five years of low inflation, including: 3.4% in 2007, slightly negative in 2006, and 1.3% in 2005.
• Israel’s 2008 unemployment rate as of November 2008 was 5.9%. This continues the country’s positive trend as unemployment was 7.4% in 2007, 8.5% in 2006, 9% in 2005 and 10.4% in 2004.
• Exports of U.S. goods to Israel during the first 11 months of 2008 totaled US$13.50 billion. Imports from Israel during this same period totaled $20.73 billion.
• The U.S. is Israel's largest single country trade partner, despite heavy European competition.
• Israel – U.S. commerce has grown seven fold since signing a Free Trade Agreement in 1985.
• Nearly all tariffs on trade between the U.S. and Israel have been eliminated since 1995.

Market Challenges

• Intense European competition.
• Agriculture trade issues, IPR protection and certain technical standard issues are non-tariff barriers.
• Tense political and security environment because of geopolitical neighborhood.
• Israel is a mature market in most sectors and U.S. companies should be ready to compete.
• The business environment and style will seem familiar to Americans, though dress may seem more informal and personal relationships sometimes play a greater role.

Market Opportunities

• Hi-tech and defense dominate Israel's trade numbers, and Israel remains a global center for hi-tech design and R&D. Hi-tech continues to provide the best opportunities for U.S.-Israel commercial partnerships, specifically in safety and security equipment and services, defense equipment, medical technologies and biotechnology products. Power generation and education/training also represent other good opportunities.
• U.S.-Israeli commercial linkages often consist of U.S. firms providing electronic inputs which Israeli firms integrate into final products that are often re-exported.

Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice.

International copyright, U.S. Department of Commerce, 2008. All rights reserved outside of the United States.