In a new report, the Organisation for Economic Co-operation and Development (OECD) says Israel exhibited a strong rebound in economic activity during 2021, and projected solid future GDP growth for the country.

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The report, December's Economic Forecast Summary on Israel, explained that the state "is projected to grow robustly by 6.3% in 2021, 4.9% in 2022 and 4% in 2023."

An earlier OECD report from May attributed Israel's economic growth to the country's "very high rate of inoculation."

The report also anticipated "strong growth" in Israel's technological exports, but warned the country's economic "recovery could be slower if the health situation deteriorates again, or the increase in inflation is stronger or more persistent than assumed in the projections."

In order to financially strengthen the nation, the report also called on Israel to implement a series of reforms designed to encourage economic recovery.

The OECD report recommended a focus on "upskilling and education" to address high poverty rates among the country's ultra-Orthodox and Arab Israeli communities, noting that income inequality in Israel exceeds that of most advanced economies.

Additionally, the report addressed a need for strong public transportation infrastructure, explaining "Traffic congestion is a major problem in Israel."

"Costs of congestion are estimated at around 2% of GDP, above levels in other high-income economies," the review said.

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Klein said he believes Israel's economy will grow by 3% in 2020 and exports will increase by an estimated 5%. Imports will likely improve by 3.4%, he said.

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The government, he said, will have to raise some taxes, while the Bank of Israel will likely keep the key interest rate at 0.1%, he said, noting this would be in line with the policy of other central banks worldwide.

Still, the government's fiscal policy is expected to be less expansive due to the high deficit, which would have some negative impact on growth, he said.

According to Klein, the job market is expected to stay solid for the most part, with unemployment noting only a slight increase from 4% to 4.2%.

"Israel's economy will continue to grow almost according to its potential growth rate," Klein said.

"The low unemployment rate, the continued rise in the average wages, the fact that the shekel is likely to strengthen even more, and low interest rates will continue to boost private consumption, as well as drive growth in Israel throughout 2020.

"At the same time, we expect an increase in the export of services led by high-tech industries. We also see the continued growth of inbound tourism," he noted.

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S&P first upgraded Israel's rating to its current one – the highest rating awarded to the Jewish state to date – in August 2018, and reaffirmed it in February.

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In its report, S&P noted it was not "overly concerned" by Israel's substantial fiscal deficit of 53 million shekels (roughly $15 million) – 3.8% of the gross domestic product, despite its exceeding the government's deficit goal of NIS 40 million ($11 million), or 2.9% of the GDP.

This is the second consecutive year in which the ratio of debt to GDP has increased, but according to the agency, there is a consensus among Israeli politicians of the need to maintain a responsible fiscal policy, as demonstrated by the Finance Ministry's plans to impose a NIS 1.15 billion ($329 million) lateral budget cut on all government ministries between 2019 and 2021.

In Friday's research note, S&P stated Israel's economy is showing continued strong growth, which the firm expects to weather the current political instability. The report further said that the strengthening shekel –bolstered further by Bank of Israel Governor Amir Yaron's recent decision to maintain the key interest rate at 0.25% – was unlikely to harm Israeli exports.

S&P further cited as reasons for its decision the fact that the Israeli economy has grown for 15 consecutive years, the low unemployment rate (3.6%), and the fact that Israel's high tech industry is enjoying peak investment.

The agency did, however, warn that the prolonged political turmoil caused by having two general elections within six months of each other, was preventing the government from dealing with fundamental issues, such as lagging investment in infrastructure, excessive bureaucracy, and the challenge of integrating the ultra-Orthodox and Arabs sectors into the workforce.

Other potential threats to Israel's international credit score are the security threats from the Gaza Strip, Syria, and Iran.

Still, the agency lauded Israel's economy as "diversified, competitive, and resilient," saying it is expected to grow annually by 3% on average until 2022.

"Growth will stem from private consumption on the back of a strong labor market, continued corporate investment activity" and Israel's strong services export, S&P wrote.

The fact that the Leviathan offshore gas field is expected to become fully operational in 2020 will boost the economy further, the agency said.

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The 2.2% growth rate for the second semester is a drop of 1.2 percentage points in comparison to the first half of 2018, which saw growth of 3.4%.

When compared to the second half of 2017, which saw growth of 4.3%, growth in H2 2018 was down by nearly half.

CBS figures point to very low growth in the business sector, which is considered an engine for overall economic growth, while quality of life remained steady.

However, per capita consumption increased only by 2.1% in the second half of 2018, compared to an increase of 4.1% in the first half of the year.

Per capita expenditure on durable goods dropped by 17%, after rising 12.9% in the first half of 2018. New car purchases plummeted by 35.2% per person. Home electronics purchases dropped 1.7% per capita, continuing a decline of 2.8% seen in the first half of 2018.

Per capita expenditures on clothing and shoes rose 2.7% in the second half of 2018.

Exports of goods and services (excluding diamonds and high-tech) rose by only 0.6% in the second semester. Imports of goods and services dropped by 1%.

Investment in home construction was also down by 3% in the second semester, a more moderate decline than the 11.1% drop seen in the first half of 2018.

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