Israel’s telecoms sector is undergoing major transformation due to the recent introduction of new wholesale arrangements for its fixed-line infrastructure. This, combined with the entrance of additional mobile operators a few years ago, has created a much more competitive environment in the Israeli telecoms sector. Israel’s fixed-line wholesale reforms came into effect early in 2015 and have increased competition in the fixed line voice and broadband sectors. The two major companies have focused on improving network performance by deploying fibre in access networks, resulting in increasing average download speeds. Other factors which have helped drive competition in Israel includes the establishment of full mobile number portability and regulatory barriers. Strong competition has led to operators focusing on mobile data and content opportunities as well as on costs.
Israel has a technologically advanced, free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizeable trade deficits, which are covered by tourism and other service exports, as well as significant foreign investment inflows.
Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals, following years of prudent fiscal policy and a resilient banking sector. Israel’s economy also has weathered the Arab Spring because their strong trade ties outside the Middle East have insulated the economy from spillover effects.
Slowing domestic and international demand, and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.6% per year during 2014-15. Income inequality, and high housing and commodity prices continue to be a concern for many Israelis. Besides, Israel’s progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services.