OECD secretary-General presented surprising report on Israel: 'Reflects resilience'

The Secretary-General of the OECD, Mathias Cormann, presented the biennial report on Israel’s economy today (Wednesday) to the Socio-Economic Cabinet, chaired by Finance Minister Bezalel Smotrich.

The report highlights the resilience of the Israeli economy, which demonstrated durability in the face of the shocks from the October 7 terror attack and the ensuing war, thanks to stable fiscal starting conditions, responsible monetary management, and high employment rates.

Looking ahead, OECD economists estimate that growth is expected to rise to 3.4% in 2025 and 5.5% in 2026. The report notes that fiscal policy will need to account for pressures due to increased defense spending, the need to address infrastructure gaps, and preparations for future demographic growth.

The report extensively addresses ways to tackle Israel’s high cost of living, primarily focusing on trade barriers, burdensome regulation, and insufficient competitive pressure, which have kept price levels high compared to OECD countries across various sectors. OECD economists positively note the enactment of the import reform "What’s Good for Europe is Good for Israel," stating that its full implementation, while reducing existing exemptions, could enhance competition and help lower price levels.

The report includes recommendations regarding leveraging the advantages of artificial intelligence (AI) by expanding higher education offerings, particularly at advanced degree levels, making employment models in academia more flexible in these fields, and maintaining a flexible regulatory approach to AI. The review also features a separate chapter discussing efforts to reduce emissions and prepare for climate change.

Finance Minister Bezalel Smotrich said: "I thank Mathias Cormann, Secretary-General of the OECD, for the comprehensive and in-depth report, which reflects the resilience of the Israeli economy during the period we are in. The report raises various challenges and opportunities that we must continue to address to ensure the continued growth of the economy in the medium and long term. The report will help advance structural changes in a variety of areas that will strengthen Israel’s economy in the coming years. The fruitful cooperation between the Finance Ministry and the OECD is a key component in formulating informed economic policy, and I wish to thank the Chief Economist, the Budget Commissioner, and the Finance Ministry’s economic attaché at the OECD."