December 17th , 2019

Bottom line: The current account surplus in the third quarter, at $3.9bn, was $300m. less than that in the second quarter. Although each of the four components of the current account (see below) declined compared to the second quarter, the net change was marginal, demonstrating how a large surplus has become a stable feature of the Israeli economy. This surplus also explains the strength of the Israeli shekel – and it is set to increase in 2020, when natural gas exports from the Leviathan field begin.

Because the current account data is so critical, yet is widely ignored in the media and barely understood among the general public, I will first give some general background.



  • A country’s current account is the summary of all its transactions with the rest of the world over a defined period (usually a quarter or a year). It has four main components: trade in goods; trade in services; primary income; secondary income.
  • Israel’s current account has the following characteristics:
    • trade in goods: includes manufactured goods of all sorts; diamonds (raw and polished); energy products (imports only); other raw materials.
    • trade in services: includes tourism (both directions); transportation services (air and sea, passengers and cargo); and, critically, ‘other services’, which includes software and computer consultancy; scientific R&D — including proceeds from sale of start-up companies; and other consultancy services.
    • primary income: comprises income from labour — income of foreign workers in Israel less income of Israelis working abroad; and income from capital — payment of interest and dividends on Israeli investments overseas, less payments on foreign investments in Israel.
    • secondary income: unilateral payments made by foreign entities to a) the Israeli government (including government-to-government aid); b) Israeli institutions (e.g. hospitals, educational institutions, etc.) and c) individuals (German restitution payments, personal bequests, gifts etc.) less unilateral payments made by Israeli entities to foreign entities.



  • The current account surplus in July-September 2019 was $3.9bn, compared to $3bn in the third quarter of 2018.
  • This is the second-largest surplus ever recorded for the third quarter – exceeded only by the $4.4bn achieved in July-September 2015.
  • The deficit on trade in goods fell to $4bn, down from $4.2bn in April-June and $4.9bn in January-March. Exports were marginally up, while imports were marginally lower.
  • The surplus on trade in services also fell, to $5.8bn, $330m less than in the second quarter, by $330m. However, this is still the highest surplus ever for a third quarter.
  • These declines may reflect the general weakness in world trade, but it seems that the strength of the shekel is also an important factor affecting exports of goods.
  • The surplus on primary income (see definition above) fell to $80m in the third quarter, from $222m in the second, and compared to $179m in the third quarter of 2018.
  • The surplus on secondary income totaled $2.03bn, some $30m less than in the second quarter.
  • In the financial account, Israel’s net external assets slipped by $1.5bn, to $162bn. – but this is an increase of $4.5bn over the total for the third quarter of 2018.

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