Trade, energy and the shekel

Israel's external economy is unusual on two counts. It is dominated by services rather than goods, which is the opposite of most middle-sized economies. And it has, in the space of a decade, gone from energy importer to net energy exporter. This piece sets out the structure of Israeli trade in goods and services, the energy turnaround, and the role of the shekel and Bank of Israel.

Goods exports

Israel exported approximately USD 61.7 billion of goods in 2024, the most recent full year for which complete data is available. The composition is concentrated:

• Electronic integrated circuits and microassemblies: 9.4 per cent of goods exports.
• Unmounted diamonds (cut and polished): 9.2 per cent.
• Pharmaceuticals (led by Teva, one of the world's largest generic-drug makers): a major category, with Teva alone among the largest single Israeli exporters.
• Chemicals (including Dead Sea minerals and speciality chemicals): a substantial category.
• Defence and aerospace systems (Elbit Systems, Israel Aerospace Industries, Rafael): a high-value category often invisible in the standard goods-export tables because of bilateral confidentiality.

Services exports

Services are the more important half of the story. Software, cybersecurity, cloud services, professional services and corporate R&D activity together account for an estimated 55 to 60 per cent of Israel's total external sales of goods and services combined. The high-tech sector contributed approximately 18.3 per cent of GDP in 2025, and around half of GDP growth that year, with a disproportionate share of that value being exported through licensing, software-as-a-service and cross-border professional services rather than physical goods.

This is the structural feature that makes Israel an unusual middle-sized economy: the services book is larger than the goods book, and the goods book itself is concentrated in chip components rather than commodity manufacturing.

Top trade partners

The five largest single-country buyers of Israeli goods in 2024 were:

1. The United States - USD 17.3 billion.
2. Ireland - USD 3.2 billion (the largest buyer of Israeli integrated circuits, driven by chip-supply contracts).
3. China - USD 2.8 billion.
4. India - a substantial partner, with bilateral trade composition heavily weighted toward defence and diamonds (final figures vary by source).
5. Germany - typically among the top five.

As a bloc, the European Union is the largest trading partner overall, with Germany, the Netherlands, the United Kingdom (no longer in the EU but a major partner separately), Ireland and France among its largest individual member-state buyers.

Free trade agreements

Israel's free-trade agreements are unusually wide for its size. They include:

• United States (1985), the first FTA the United States ever signed with any country.
• European Union (1995), the Israel-EU Association Agreement, with subsequent technical protocols.
• Canada (1996), Mexico (2000), Turkey (1996), MERCOSUR (2007), Colombia (2013), Panama (2018), Republic of Korea (2022) and the United Kingdom (post-Brexit successor agreement).
• An India-Israel FTA has been in negotiation since 2010 and remains an active dialogue as of mid-2026.

The shekel

Israel's currency is the New Israeli Shekel (NIS), known internationally by the ISO code ILS. It was introduced on 1 September 1985 as part of the Economic Stabilisation Plan that ended the early-1980s hyperinflation, replacing the previous shekel at a rate of 1 new shekel to 1,000 old shekels.

Monetary policy is set by the Bank of Israel, the country's central bank, founded in 1954. The Bank operates under the 2010 Bank of Israel Law, which gives it formal independence and a primary mandate of price stability. The Monetary Committee sets the policy interest rate at six-weekly intervals.

The shekel is fully convertible. Currency reserves, held by the Bank of Israel, stand in the hundreds of billions of US dollars and are among the largest per-capita reserves in the world. The Bank has historically intervened in foreign exchange markets to moderate appreciation pressure from tech-sector capital inflows.

The energy turnaround

For its first six decades Israel was an energy importer, dependent on coal, fuel-oil and imported natural gas. That changed with two major offshore gas discoveries in the East Mediterranean: Tamar (came on stream 2013, capacity expanded to 1.6 billion cubic feet per day in 2025) and Leviathan (came on stream 2019).

Combined Tamar and Leviathan production was projected to cross 3 billion cubic feet per day for the first time in 2026. The gas powers most Israeli electricity generation, has materially reduced air-pollution-related deaths, and supports a growing export book:

• A long-running Israel-Egypt gas pipeline supplies Egyptian power generation and feeds Egyptian LNG plants for re-export to Europe.
• A 15-year, USD 35 billion gas-supply deal between Leviathan partners and Egypt was agreed in 2025, with a USD 2.36 billion expansion programme at Leviathan announced alongside it.
• A 2016 agreement with Jordan supplies Jordanian power generation.

The energy turnaround has freed fiscal resources, reduced the current-account deficit, and given Israel a new geopolitical position in the East Mediterranean. The proposed EastMed pipeline to Europe has stalled but remains on the policy agenda.

In one paragraph

Israel exported USD 61.7B of goods in 2024, dominated by integrated circuits and polished diamonds, with the United States, Ireland, China, India and Germany the largest buyers. Services (software, cybersecurity, cloud, R&D) are larger than goods and account for an estimated 55 to 60 per cent of total external sales. Tamar (2013) and Leviathan (2019) turned Israel into a net energy exporter; a USD 35 billion fifteen-year gas-supply deal with Egypt was agreed in 2025. The Bank of Israel runs the New Israeli Shekel, introduced in 1985 as part of the Economic Stabilisation Plan; reserves are among the largest per capita in the world.

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Sources

[1]: "Which countries trade the most with Israel and what do they buy and sell?" Al Jazeera (May 2025), citing Israeli Central Bureau of Statistics. https://www.aljazeera.com/news/2025/5/22/which-countries-trade-the-most-with-israel-and-what-do-they-buy-and-sell

[2]: "Israel's Top Exports 2025." World's Top Exports. https://www.worldstopexports.com/israels-top-10-exports/

[3]: "Israeli High-Tech 2026: Stronger, Bigger and More Vulnerable Than It Looks." VC Cafe / Israel Innovation Authority data. https://www.vccafe.com/israeli-high-tech-2026-stronger-bigger-and-more-vulnerable-than-it-looks/

[4]: Bilateral trade fact-sheets, Israeli Ministry of Foreign Affairs. https://www.gov.il/

[5]: Free Trade Agreements of Israel, Israeli Ministry of Economy and Industry. https://www.gov.il/en/departments/ministry_of_economy_and_industry

[6]: "The New Israeli Shekel." Bank of Israel history. https://www.boi.org.il/en/

[7]: Bank of Israel Law (2010) and Monetary Committee framework. https://www.boi.org.il/en/

[8]: "Eastern Med's Leviathan and Tamar Fields Poised to Expand Natural Gas Production." Natural Gas Intelligence (2025). https://naturalgasintel.com/news/eastern-meds-leviathan-and-tamar-fields-poised-to-expand-natural-gas-production-say-chevron-execs/

[9]: "Israel's Record Gas Production 2026: Leviathan & Tamar Expansion Boosts Exports." IndexBox (2025-26). https://www.indexbox.io/blog/israels-natural-gas-production-to-hit-record-high-in-2026-following-major-field-expansions/

[10]: "Eastern Mediterranean Gas Balance Shifts as Israel Ramps Up Production." OilPrice.com (2025-26). https://oilprice.com/Energy/Natural-Gas/Eastern-Mediterranean-Gas-Balance-Shifts-as-Israel-Ramps-Up-Production.html