Israel's economy has changed from a traditional economy dominated by agriculture, light industry and labor-intensive industries to a knowledge-based economy, and its telecommunications, high-tech and agricultural science and technology industries are highly competitive internationally. In the past 15 years, great changes have taken place in Israel's macroeconomic environment. According to the standards of western countries, inflation has been successfully curbed, and the inflation rate in 2000 was 0%. According to the deficit reduction law, the annual budget deficit is planned as a percentage of GDP to ensure that government departments are responsible for every expenditure. The ratio of national debt to GDP is also declining. Israel has been committed to maintaining macroeconomic stability as a magic weapon to encourage economic growth and provide a predictable macroeconomic environment for private enterprises.

Gross Domestic Product (GDP)

In 2000, the per capita GDP of Israel was 17500 USD, which was higher than that of Spain, New Zealand, Portugal and Greece, and also exceeded that of some EU member states. In 2000, the per capita GDP of Israel increased by 3.4% after two years of negative growth. This growth rate is relatively high compared with most European countries (for example, 2-3%), but Israel's domestic population is growing faster, resulting in negative growth or stagnation of its per capita GDP.

In the early 1990s, the annual growth rate of Israel's GDP was considerable. During 1994- 1996, the increase was very high. Later, during the period of 1997- 1999, this figure decreased or even became negative. The high economic growth rate is mainly attributed to two aspects: first, Israel absorbed a large number of Russian immigrants during this period, which promoted the rise of high-tech industries; Second, the Middle East peace process. 1997- 1998 economic depression is mainly due to the decrease in the number of immigrants, which directly leads to the decline in durable goods consumption and real estate investment. The slowdown in world economic and trade growth has also affected the Israeli economy. Fortunately, due to its macroeconomic stability, the global financial turmoil between 1997- 1998 did not develop into an Israeli financial crisis. The economic situation of 1999 is quite dramatic: after the inertia decline in the first quarter, the gross domestic product began to rebound strongly. The current economic recovery is attributed to the restart of the peace process, the growth of world economy and trade, and the macroeconomic stability of Israel.

In 2000, the Israeli economy experienced rapid and drastic changes. The economy grew very fast in the first three quarters. If the economic growth in the early 1990s was mainly driven by consumption, then the composition of economic growth in 2000 was healthier, mainly driven by exports. In the fourth quarter of 2000, the economic situation of Israel changed due to the slow development of American economy, the decline of Nasdaq index and the change of regional political situation. Although Nasdaq has a great influence on Israel's economy, most of Israel's high-tech companies are not Internet companies, so they are not vulnerable to the current crisis. The recent riots mainly affected the following three industries: tourism, construction and agriculture. Tourism is the most sensitive to the regional political situation and bears the brunt, with the number of foreign tourists and domestic tourists declining. 30% employees in the construction industry are Palestinians, and agricultural workers 12% are Palestinians, so they are all affected to some extent. However, it should be pointed out that these two industries have been affected by the economic restructuring in Israel. The losses caused by security problems to Israel's economy account for about 1% of GDP. The forecast of economic development in 200 1 year is 1%, mainly due to the slowdown of American economic growth.

fiscal policy

The focus of Israel's fiscal policy is to reduce the state's intervention in the economy and improve the financial situation, that is, to reduce the proportion of fiscal deficit and government debt to GDP. In fact, the government budget has been reduced from 65,438+0.7% of GDP in 1990 to 47.3% in 2000. The budget deficit also decreased from 4.9% of GDP in 1990 to 0.6% in 2000. The deficit target of 200 1 is 65438+0.75% of GDP. Israel's domestic and foreign government debt has also decreased: the percentage of domestic debt in GDP has dropped from 1989 to 104% to 70% in 2000; The percentage of foreign debt in GDP decreased from 39% in 1990 to 24% in 2000. However, compared with European countries, the ratio of Israeli government debt to GDP is still high.

In the past ten years, despite frequent political changes, Israel has maintained a good financial situation. Both the political left and the right believe that a healthy fiscal policy should be maintained. Since 1985, the Israeli government can no longer borrow money from Israeli banks and can only repay its debts in the form of bonds. The Israeli government issued bonds in Israel, the United States, Europe and the Far East.

In August 2000, Israel began to implement the purchase tax reform. Household entertainment electronic equipment, all kinds of electrical appliances, cosmetics and raw materials are tax-free. This move aims to strengthen social justice and equality by reducing the tax burden by 0.25%.