For decades, the Israeli high-tech industry was considered the growth engine of the Israeli economy. Indeed, in the past, high- tech output grew at a significantly higher pace compared to other sectors, leading the overall GDP growth of the Israeli economy.

Commissioned by the Authority, the Central Bureau of Statistics computed updated data about high-tech output (2019 data is still not complete), presented in Figure 1.3. The data suggests that in recent years, high-tech output growth was in line with overall GDP growth. The Israeli high-tech industry is no longer a “growth engine”. It is now one of many railcars, growing at a similar pace to other sectors.

Figure 1.3: Annual Growth Rate, GDP and High-Tech (1996-2019)

 

Figure 1.4 presents the growth of high-tech output by sub-sector, and indicates that the high-tech commodities sub-sector is the main source of the slowdown in high-tech output. Figure 1.4 also shows that since 2013, while software and R&D output continues to grow at a higher pace than to the GDP, the output of high-tech goods has been declining and growing at a slower pace than the GDP.

Figure 1.4: Growth Rate, GDP and High-Tech Subsectors (2008-2019)