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 sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.
Israel had an internet penetration rate of 78% by the end of 2018, which is above the regional average. In 2019 the regulator launched a tender of 5G spectrum in the 700 MHz, 2600 MHz and 3500–3800 MHz bands for mobile telephony.
Israel has a very high household internet penetration rate, almost all of which are broadband connections. · DSL subscriptions hold the largest market share of fixed broadband subscriptions. Fibre-network deployment is well underway as well, led by the Israel Broadband Company (IBC). Mobile operators in Israel have increasingly felt the pressure from a highly competitive market, resulting in declining profits and revenue. Mobile ARPUs have dropped over the past few years for all the major operators, with the market accommodating six mobile operators. Consumers enjoy inexpensive 3G services, 4G cellular service, and fixed broadband was available to 99% of all households as of 2019.
Although the global financial crisis of 2008-09 spurred a brief recession in Israel, the country entered the crisis with solid fundamentals, following years of prudent fiscal policy and a resilient banking sector. Israel’s economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East 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 2.8% per year during the period 2014-17. Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel’s income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of “tycoons” have a cartel-like grip over the major parts of the economy. In the long term, Israel faces structural issues including low labor participation rates for its fastest growing social segments – the ultraorthodox and Arab-Israeli communities. Also, 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 – sectors which face downward wage pressures from global competition.
Bezeq, Israel’s incumbent fixed-wire line service provider, was privatized in 2005. Bezeq and its subsidiaries offer a range of telecom services, including fixed-line, mobile, high-speed Internet, transmission, and pay TV. With more than 2.2 million subscribers of fixed-line services, the company offers domestic carrier services, including basic telephony, Internet infrastructure and access services, and transmission and data communications services. This segment also provides infrastructure, transmission, billing, leasing space, and related services for other communications operators, operates and maintains radio transmitters, carries out set-up and operation works of networks or sub-networks for various customers and offers virtual private networks, data center, and search engine services.