Economy of Israel

Israel has a highly developedfree-market economy. As of 2025, Israel has the 25th largest economy in the world by nominal GDP, according to the IMF. Israel maintains the highest average wealth per adult and number of billionaires in the Middle East. Israeli public finances are sensitive to regional armed conflict due to deficit spending related to its large defense budget. An innovation economy, Israel has a highly educated workforce, developed capital markets as well as an advanced start-up ecosystem.

The country's major economic sectors are technology, industrial manufacturing, and energy. Israel has signed free trade agreements with many world nations. In its early decades, the Israeli economy was largely state-controlled and shaped by social democratic ideas. In the 1970s and 1980s, the economy underwent a series of free-market reforms and was gradually liberalized. Israel has a close foreign trade relationship with the United States spanning both aid and bilateral investment.