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.
Mining and quarrying
The country's mining industry supplies local demands for fertilizers, detergents, and drugs and also produces some exports. A plant in Haifa produces potassium nitrate and phosphoric acid for both local consumption and export. Products of the oil refineries at Haifa include polyethylene and carbon black, which are used by the local tire and plastic industries. The electrochemical industry also produces food chemicals and a variety of other commodities. Oil pipelines run from the port of Eilat to the Mediterranean. Israel has some producing oil wells but continues to import most of its petroleum.
Manufacturing
Industrial growth has been especially rapid since 1990 in high-technology, science-based industries such as electronics, advanced computer and communications systems, software, and weapons, and these have come to command the largest share of overall manufacturing output. Other principal products include chemicals, plastics, metals, food, and medical and industrial equipment. Israel's diamond-cutting and polishing industry, centered in Tel Aviv, is the largest in the world and is a significant source of foreign exchange. The great majority of industries are privately owned, one exception being the government-run Israel Aircraft Industries, Ltd., a defense and civil aerospace manufacturer. Factories producing military supplies and equipment have expanded considerably since the 1967 war-a circumstance that stimulated the development of the electronics industry.
