The OECD (The Organization for Economic Cooperation and Development) has dramatically revised its economic forecasts for Israel, predicting GDP growth of just 0.6% in 2024, a sharp downgrade from the 1.9% estimate in May, and 2.4% in 2025, significantly lower than the previously anticipated 4.6%.
This downward adjustment signals negative per capita growth in 2024, as the country grapples with mounting inflationary pressures, fiscal imbalances, and geopolitical instability.
Inflation expectations have also been revised upward, with forecasts now at 3.1% for 2024 and 3.6% for 2025, surpassing the government’s target range. The OECD has cautioned that inflationary expectations near the government’s upper limit of 3% could necessitate further interest rate hikes to maintain economic stability.
To address Israel’s widening budget deficit, the OECD has stressed the importance of adopting permanent structural reforms rather than relying on temporary measures. These include removing VAT exemptions to increase revenue, phasing out subsidies that discourage workforce participation—particularly among ultra-Orthodox men—and introducing mandatory core curriculum education for all students.
These steps are deemed essential to improving productivity and expanding labor force participation, both critical for Israel's long-term economic growth and stability.
* Calcalist contributed to this article.
0 Comments