The organisation’s chief cited the Jewish state's strong high-tech sector and resilience but it is recommending contentious reforms to religious education to ensure future stability
April 2, 2025 12:03
ByJC Reporter, Jewish News Syndicate
OECD Secretary-General Mathias Cormann offered a positive outlook for Israel's economic future during a meeting in Jerusalem on Tuesday, predicting strong growth despite the economic challenges at hand.
Speaking alongside Israeli Prime Minister Benjamin Netanyahu at the Prime Minister’s Office, Cormann emphasised the resilience of Israel’s economy and the vitality of its high-tech sector.
He stated that the OECD expects Israel’s economic growth in the coming year to surpass both the global average and the performance of other OECD member states.
However, while Cormann's comments painted an optimistic picture, recent OECD reports present a more cautious forecast.
In particular, the OECD’s December 2024 report downgraded Israel's projected GDP growth for 2025 to just 2.4 per cent, a significant reduction from its previous estimate of 4.6 per cent. The revision was attributed to elevated defence spending and a slowdown in consumer activity due to geopolitical tensions.
Yet one consistent bright spot for Israel’s economy remains the high-tech sector, particularly its ecosystem for artificial intelligence (AI) creation.
An OECD report called AI critical for the continued health of the tech sector, which remains a key economic growth driver, according to Reuters.
However, it cautioned: “Looking ahead, a flourishing AI sector will require a stronger basis of high-level competencies and academic research.” It also called for AI regulation that ensures new data privacy legislation "provides AI producers and users with legal stability."
Reuters added that "Israel's economy looks to rebound over the next two years should geopolitical tensions ease, although the country needs a host of structural reforms to support government finances and sustain growth over the long term".
Despite these challenges, the OECD also anticipates a rebound for Israel’s economy in the next two years, provided that the geopolitical climate stabilises.
The organisation now estimates growth of 3.4 per cent in 2025, with a further increase to 5.5 per cent in 2026, thanks to the expected recovery of high-tech exports, consumer spending, and investment.
The discussion between Cormann and Netanyahu focused on how advanced economies are navigating uncertainty and how Israel can sustain momentum amid ongoing regional and international challenges.
Senior Israeli officials attending the meeting included National Security Council Director Tzachi Hanegbi, National Economic Council Chairman Professor Avi Simhon, and Israeli Ambassador to the OECD Shai Cohen.
Elsewhere, the OECD recommended that Israel implement structural reforms to ensure longer-term growth, including market liberalisation and measures to boost employment, particularly by enforcing core curricula in Arab and ultra-Orthodox Jewish schools so that more people enter the workforce.
“Removing benefits that discourage work among strictly-Orthodox men would also boost employment,” the OECD report stated.