Israelis Grow Wealthier Amid War, But Face Key Economic Challenges
Translated & summarized from Maariv by baba
Despite ongoing conflict, Israelis are experiencing rising wages and living standards, with financial assets reaching record highs. The article by Shlomo Maoz notes that while the economy appears strong, with increased travel and vehicle purchases, the next government must address challenges like expanding labor force participation. Israel's per capita GDP ranks high globally, but the nation needs to revive traditional industries and implement human capital reforms for future security and growth.
The story in 6 lines · by baba
- Israelis' financial assets reached a record 7.623 trillion shekels by June, a 51% increase in four years.
- Average real wages have risen, partly due to extended reserve duty keeping lower-wage earners out of the workforce.
- Israel's per capita GDP is projected to be the 18th highest globally this year at $72,440.
- Increased international travel and new vehicle purchases indicate Israelis are compensating for security tensions.
- The next Israeli government faces the challenge of expanding labor force participation.
- Food prices saw a 0.4% decrease in September, contrary to perceptions of widespread increases.
Despite ongoing conflict, Israelis are experiencing rising wages, increased living standards, and low unemployment, with financial assets reaching record highs, according to columnist Shlomo Maoz. The article highlights that the average real wage has increased significantly, partly due to the prolonged reserve duty (miluim) service, which has kept many younger, lower-wage earners out of the workforce. This situation, coupled with a slower entry of young people into the job market, has artificially boosted the average salary.
Financial assets held by the public reached an all-time high of 7.623 trillion shekels by the end of June, a 51% increase over the past four years. Israelis are also compensating for security tensions with increased international travel, with a 6% monthly rise in departures during July-September. The purchase of new vehicles is also at a record pace, with an expected 300,000 new cars on the road by year's end, a significant portion of which are Chinese imports.
Despite the positive economic indicators, the next government will face significant challenges, primarily expanding labor force participation. The article notes that while wages have risen, tax brackets have not been updated since January 2025, meaning some earners are now in higher tax brackets. Furthermore, the article points to a decline in food price increases, with a 0.4% drop in September and a modest 1.1% rise over the past 12 months, contrary to public perception. Prices for furniture and home goods have fallen by 4.3%, and clothing and footwear by 5.7%.
Internationally, Israel's per capita GDP is projected to reach $72,440 this year, ranking 18th globally, and is expected to rise to $76,150 next year, placing it 17th. This surpasses countries like the UK, France, Italy, Germany, Canada, and Japan. However, Israel still lags behind the G7 average, largely due to the higher GDP per capita in the United States.
Maoz argues that Israel must re-establish traditional and heavy industries, which have diminished due to reliance on cheap imports and sanctions. He stresses the need for reforms in human capital and worker training to ensure continued growth and national security, stating that a strong economy is vital for Israel's survival.
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