The government raised its 2013 economic growth forecast to 3.5 percent from 3% on Sunday, citing the influence of the start of natural gas production.
The Bank of Israel projects 3% growth next year.
A U.S.-Israeli consortium led by Noble Energy and Delek Group is expected to start production from the Tamar field off Israel's Mediterranean coast, which has an estimated 274 billion cubic metres (bcm) of reserves, in the first half of 2013.
Israel's Finance Ministry expects the gas production to contribute 0.8% to the gross domestic product next year and 1% in 2014. The ministry also set a 2014 GDP growth estimate of 3.9%.
"The extra growth will not ... add to state revenues," Finance Minister Yuval Steinitz said in a statement. "Assuming the growth forecast is realized ... Israel over the next two years will continue to lead growth in the Western developed world."
Israel's economy is expected to grow close to 3.5% in 2012.