The Israeli economy has been remarkably resilient to the shock of the 7 October terror attacks and subsequent war. This strength under exceptionally difficult circumstances stems from its sound fiscal position before the war, deft monetary management, a stable financial system and strong growth potential owing to high employment rates and a vibrant high-tech sector. Keeping the economy steady and securing solid growth requires curbing inflation and containing fiscal deficits while funding future spending needs. Economic performance would strongly benefit from reforms that address infrastructure gaps and improve educational outcomes and labour-market participation among ultra-orthodox and Arab Israelis. Removing barriers to foreign and domestic and foreign trade, by cutting red tape, easing border processes and lowering tariffs would strengthen productivity, increase incomes and durably lower consumer prices. Capitalising on an already strong artificial intelligence (AI) industry is essential, by maintaining a flexible regulatory approach and further nurturing links between higher-education institutions and AI firms. Reducing greenhouse gas (GHG) emissions further requires carbon-free power generation through higher carbon tax rates on natural gas and more energy-efficient buildings.
SPECIAL FEATURE: ADDRESSING THE HIGH COST OF LIVING
