Israel's Demography: Opportunities and challenges.
12.02.2023 | Yishai Gelb
A country's demography is a critical factor in determining a country's strengths, weaknesses, and future economic outlook. Demography is the study of statistics such as births, deaths, income, or disease incidence, illustrating the changing structure of human populations. Knowing a country's demography illustrates how many working-aged people a country has now and in the future to predict economic growth, consumption rates, or how much the government will need to spend on the retirement and medical needs of the older population.
So how does Israel’s demographics look?
Israel has a population of about 9.17 million people as of 2023. Just over one million people are over the age of 65 and about 2.5 million people are under the age of 20. Nearly half of the population is aged between 25-65, the working age, contributing to a healthy proportion between people paying into the system through taxes and people feeding off of the system with benefits, social security, and pension.
Based on Israel’s birth rate, Israel is expected to reach about 18 million people by 2100 just from internal growth due to Israel’s fertility rate being just under 3 children per woman. That is higher than the world average, and in developed countries, but lower than in the developing countries
Historically, the Land of Israel never had a population of over 1.5 million people. Prior to the British mandate and the establishment of Israel, the only other time the Land housed over 1 million people was during the Byzantine rule in 300ac.
Takeaways from Israel’s demography.
First, Israel's economy will continue to grow relatively fast at a rate of at least 2.5% a year, and the housing cost will continue to go up for the foreseeable future. Israel's healthy ratio between working and retired citizens will remain so for the next three generations at least. As long as enough working ages people actually work and pay into the system, there should be enough tax collection to ensure that retired citizens have all their benefits paid for from social security and retirement. The constant growth of 1.4% a year will keep housing prices high so long as government policy doesn't change drastically.
Second, the population size is not sustainable without industrial capabilities, food importation, and modern technologies. The amount of rainfall and open land for farming cannot sustain more than 2 million people without modern equipment to source more water from deeper underground, let alone desalination. Without imported fertilizers and food, the country could not sustain such a massive population, If Israel’s access to food importation and plenty of energy to fuel modern tools, Israel's population would collapse.
In conclusion, Israel will continue to flourish, and its economy will grow, so long trade routes stay open and Israel has access to external markets. As the world deglobalizes, Israel faces the challenge to secure its food and energy needs, and its exporting market open.