Israel's per capita Gross Domestic Product (GDP) was approximately 17,300 $ in 2001, placing it among the most developed nations in the world. In the years 1991-96, Israel attained one of the highest GDP growth rates (averaging 6%) in the developed world. This fell to 2% in 1998 but climbed to 5.9% again in 2000. Then, in 2001- with the worldwide economic slow-down hitting Israel - the GDP fell to a negative growth rate of -0.6%; here also due to a deterioration in security conditions that began in the last quarter of 2000.

Not withstanding, the country's most remarkable economic achievement in the 53 years of its existence has been the high rate at which it has grown. This, while dealing with four major challenges: maintaining national security, which now accounts for some ten percent of the GDP; absorbing over two million immigrants - three times the number of its 1948 population - the raison d'etre of the Jewish state; establishing a modern infrastructure to meet the requirements for economic growth; and providing a high level of public services.

The price for this impressive growth has always been a deficit in the balance of payments, arising from the gap between imports and exports of goods and services. In 2001, imports totaled $43.5 billion, exports $38.7 billion and the deficit $4.8 billion. Two other current challenges include curbing inflation, brought down from 445% in 1984 to 0% in 2000 (though 1.4% in 2001); and obtaining the enormous foreign investment required to provide jobs to counteract unemployment, resulting, inter alia, from renewed mass immigration (over one million since 1989).

AGRICULTURE. Israel has become a world leader in quality, high-yielding agriculture, with farmers and researchers cooperating in developing and applying sophisticated science-based methods in all agricultural branches.

Locally designed and manufactured machinery and electronic equipment are widely used in farming activities, from irrigation and harvesting to milking and packing.
Making maximum use of scarce water and arable land, Israel produces more food than it needs for its own use. Imports include mainly grain, meat, tea, coffee, rice and sugar, while it exports much more, with long stemmed roses, spray carnations, melons, kiwis, strawberries, tomatoes, cucumbers, peppers and avocados among the most successful, especially in European and American markets during the cold winter months.

INDUSTRY. The industrial sector is dynamic and widely diversified. In the last two decades, the percentage of industrial production exported has steadily risen to over 50 percent today, making up 92% of Israel's $27.4 billion exports of goods.

Lacking most basic raw materials but endowed with a high-quality labor force, Israel's industry has concentrated on manufacturing products with a high added value, based on scientific creativity and technological innovation. International-level strides have been made in the fields of medical electronics, agrotechnology, telecommunications, fine chemicals, computer hardware and software, food-processing and solar energy. In addition, the country's diamond cutting and polishing industry is the largest in the world; in 2001, $7.5 billion worth of stones was exported.

In 2001 over 4% of the GDP was spent on civilian research and development (R&D), which is on a par with most industrialized countries. R&D is carried out in the universities, government and public research institutes, medical centers and military enterprises, as well as by private industrial firms.

FOREIGN TRADE. Trade is conducted with countries on six continents. Some 42 percent of imports and 26 percent of exports are with the European Union (EU), with which Israel concluded (1975) a free trade agreement. A similar agreement, updated in 1995, was signed (1985) with the United States, whose trade with Israel accounts for 20 percent of imports and 38 percent of its exports.

TOURISM. Some 2.4 million people from all over the world visited Israel in 2000, for its archeological and religious sites, well-developed tourist facilities and fine beaches on the Mediterranean, Dead and Red seacoasts, as well as around Lake Kinneret (Sea of Galilee). Some 54 percent of this influx of tourists came from Europe, 28 percent from the Americas and 10 percent from Asia.
However, one of the worst manifestations of deteriorating security conditions on the economy is tourism, which fell by 54% in 2001 to 1.2 million visitors.

CURRENCY. The unit of currency is the shekel (divided into 100 agorot), known as a unit of weight for means of payment in gold and silver as early as the second millennium BCE. It is recorded in the Bible that Abraham's servant approached Rebecca at the well with "a golden earring of half a shekel weight, and two bracelets for her arms of ten shekel weight in gold/" (Genesis 24:22).

LABOR AND EMPLOYMENT. Extensive legislation exists for the protection and welfare of workers. Minimum requirements are anchored in law, including a maximum 47-hour work week, compensation for overtime and holiday work, paid annual vacation and sick leave, as well as severance payments and pension plans.

Wages and specific working conditions in the various economic sectors are set forth in agreements negotiated between the government (as a major employer), the various trade unions and the organizations of employers.