gy machinery, and agricultural products
(fruits and vegetables) are the biggest export earners. The balance of
payments has traditionally been negative, but is offset by large transfer
payments and foreign loans. About half of Israel's $18 billion external
government debt is owed to the US, which is its major source for economic
and military aid. To earn needed foreign exchange, Israel must continue
to exploit high-technology niches in the international market, such as
medical scanning equipment. Iraq's invasion of Kuwait on 2 August dealt
a blow to Israel's economy in 1990. Higher world oil prices added an
estimated $300 million to Israel's 1990 oil import bill, and helped
keep the inflation rate at 18% for the year. Regional tensions
and continuing acts of the Palestinian uprising
(intifadah)-related violence contributed to a sharp dropoff in
tourism--a key source of foreign exchange--to the lowest level since the
1973 Arab-Israeli war. In 1991, the influx of up to 400,000 Soviet
immigrants will increase unemployment, intensify the country's
housing crisis, and contribute to a widening budget deficit.

_#_GNP: $46.5 billion, per capita $10,500; real growth rate 3.5%
(1990 est.)

_#_Inflation rate (consumer prices): 18% (1990)

_#_Unemployment rate: 9.8% (March 1991)

_#_Budget: revenues $28.7 billion; expenditures $33.0 billion,
including capital expenditures of $NA (FY91)

_#_Exports: $10.7 billion (f.o.b., 1989);

commodities--polished diamonds, citrus and other fruits, textiles
and clothing, processed foods, fertilizer and chemical products, military
hardware, electronics;

partners--US, UK, FRG, France, Belgium, Luxembourg, Italy

_#_Imports: $14.2 billion (c.i.f., 1989 est.);

commodities--military equipment, rough diamonds, oil, chemicals,
machinery, iron and steel, cereals, textiles, vehicles, ships, aircraft;

partners--US, FRG, UK, Switzerland, Italy, Belgium, Luxembourg

_#_External debt: $24.5 billion, of which government debt is
$18 billion (December 1990)

_#_Industrial production: growth rate - 1.5% (1989); accounts
for about 40% of GDP

_#_Electricity: 4,392,000 kW capacity; 17,500 million kWh produced,
4,000 kWh per capita (1989)

_#_Industries: food processing, diamond cutting and polishing,
textiles, clothing, chemicals, metal products, military equipment,
transport equipment, electrical equipment, miscellaneous machinery,
potash mining, high-technology electroni