1. STATE OF ISRAEL
MINISTRY OF FINANCE
International Affairs Department
ECONOMIC HIGHLIGHTS
July 2011, 2nd Quarter 2011
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2. Contents
Economic Figures
Balances
International Comparisons
Israel and the OECD
Note:
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International Agreements of each chapter by clicking the
emblem of Israel on the top of
each slide.
Relevant Sites
Contact Us
3. Economic Figures
Main Economic Indicators
GDP and Business GDP
Growth: Israel compared to the World
Major GDP Components
Exports of Goods and Services
Main Trading Partners
Foreign Investments
Unemployment & Participation Rates
Inflation Rate
Inflation Rate Worldwide
Growth of Main GDP Components 2008
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4. Main Economic Indicators
2010 2010 2010 2011
Criteria 2009 2010
Q2 Q3 Q4 Q1
GDP
203.6 213.1 52.9 53.5 54.5 55.1
(current prices in $B)*
Real GDP Growth Rate
0.8% 4.7% 5.5% 4.8% 7.6% 4.7%
(%)
GDP per Capita
28,581$ 29,531$ -- -- -- --
(PPP adjusted)*
GDP per Capita Growth Rate
-1.1% 2.8% 3.7% 2.8% 5.4% 2.7%
(%, 2005 prices)
Exports (Goods & Services) $B* 80.4 91.3 23.0 23.1 23.7 24.6
(As Percentage of GDP) (39.5%) (42.9%) (43.5%) (43.1%) (43.5%) (44.6%)
Imports (Goods & Services) $B* 76.0 85.6 21.3 21.3 21.1 22.9
(As Percentage of GDP) (37.3%) (40.1%) (40.2%) (39.7%) (40.5%) (41.5%)
Unemployment Rate
7.6% 6.6% 6.5% 6.5% 6.5% 6.0%
(%)
*Current Prices, using a public exchange rate of 1$ = 3.46 NIS
CONTINUE
** Estimated
Source: Ministry of Finance, IMF
5. Main Economic Indicators
Criteria 2007 2008 2009 2010
Total Gross Debt
77.8% 77.1% 79.3% 76.4%
(% of GDP)
Government Expenditure
43.6% 43.0% 43.0% 42.7%
(Percentage of GDP)
Current Account Surplus
2.9% 0.8% 3.6% 2.9%
(% of GDP)
Inflation Rate
0.5% 4.6% 3.3% 2.7%
(CPI, yearly average)
CONTINUE
Source: Ministry of Finance
6. Main Economic Indicators
Domestic Bonds Overseas Bonds
Rating Firm Term Forecast
Rating Rating
Long A1 A1
Moody's Stable
Short - P1
Long AA- A
Standard & Poor's Stable
Short A-1+ A-1
Long A+ A
Fitch Stable
Short - F1
All 3 rating firms have reaffirmed Israel’s rating, without any downgrade,
Since the global economic crisis in 2009.
CONTINUE
Source: Ministry of Finance
7. GDP and Business GDP
Annual rate of change, constant prices
In 2010, Israel has recovered from the global In the 4th quarter of 2010, Israel
10% economic crisis, and is back to previous years’ experienced exceptional growth rates
8.7%
9% growth rates
8% 7.0% 7.6%
7% 6.7%
6.0%
5.7% 5.8%
5.4%
6% 5.4% 5.5% 5.1%
4.8% 4.7%
4.7% 4.6%
5% 4.2%
4%
3%
2%
0.8%
1% 0.2%
0%
2006 2007 2008 2009 2010 2010 Q2 2010 Q3 2010 Q4 2011 Q1
-1%
GDP Business GDP
-2%
CONTINUE
Source: Ministry of Finance.
8. GDP Growth
Israel compared to advanced economies*
(annual rate of change, constant prices)
5.7%
5.6% 5.4%
5.0% 4.9%
4.7%
4.6%
4.2%
3.6%
3.1% 3.0%
2.7% 2.7%
2.7%
2.6%
1.6%
0.8%
0.5% 0.2%
-0.5% 2004 2005 2006 2007 2008 2009 2010
Since 2004, Israel’s growth rate has exceeded the average growth rate
-1.5% of advanced economies.
In 2009, as most of the world experienced a decline in GDP,
-2.5%
Israel experienced a 0.8% growth in it’s GDP
-3.5%
Advanced Economies Israel Growth
-3.4%
CONTINUE
Source: Ministry of Finance, IMF
9. Major GDP Components
Annual rate of change, in constant prices
20.0%
Global Economic Crisis
14.6%
15.0% 13.6% 13.6%
12.6%
10.0% 9.3%
5.9% 6.3% 5.9%
5.0% 4.3% 4.1%
3.1% 3.1% 3.0%
2.1% 2.2% 2.2%
1.4% 1.4%
0.0%
2006 2007 2008 2009 2010
-5.0%
-5.8%
In 2010, Investment in Fixed Assets and Export of Goods and
-10.0%
Services recovered sharply, after they were contracted severely in
2009 due to the economic crisis.
-12.5%
-15.0%
Private Consumption Government Consumption Investment in Fixed Assets Exports of Goods and Services
CONTINUE
Source: Ministry of Finance
10. Exports of Goods and Services
US $ Billions, current prices
Global
90.0
Economic
80.0 Crisis
Services
70.0 24.1
Goods 24.7
60.0 21.1
22.0
19.3
50.0 17.4
16.0
40.0
13.4
30.0 57.2
45.9 55.7
50.3
20.0 43.3
36.7 39.8
30.2
10.0
0.0
2003 2004 2005 2006 2007 2008 2009 2010
CONTINUE
Source: Ministry of Finance
11. Israel’s Main Trading Partners
2010, US $ Billions
7
20
Imports
6
18 Exports
16 5
14
4
12 6.7
3 6.1
10
18.5 2
3.7
8 3.2
2.4 2.2
1 2.1
1.8 1.8 1.8
6
0
4
6.0
2
3.1 2.9
2.3 1.8 1.7 1.3 1.3 1.3
0
CONTINUE
*Since July 1997 the data on trade with Hong-Kong is added to the data on China
Source: Central Bureau of Statistics
12. Israel’s Main Trading Partners
US $ Billions
30
29.7
Europe 25 26.8 26.4
Asia 22.9
20
North America
15
13.7 13.3
10 11.9
10.0
Exports 8.3 8.7
7.3
5 6.3
30
0
25
21.2
19.9 19.6
20 21.9
17.6 Imports
19.2 18.9
15
15.4
13.8
10 12.2
9.8 9.5
5
0
CONTINUE
Source: Central Bureau of Statistics
13. Net Foreign Investments in Israel
US $ Billion
25
Direct Investments
Total Investments
20 19.4
17.6
15.3 Global Economic
15 14.4 Crisis
10.9 10.7 10.7
10 9.5
8.8
8.3
4.9 5.2
5 4.3 4.3 4.4
3.3
2.4
1.6
0
2002 2003 2004 2005 2006* 2007 2008 2009 2010
CONTINUE
* 2006 is exceptional due to a large acquisition by Teva Pharmaceutical Industries Ltd
Source: Ministry of Finance
14. Unemployment and Participation
As % of total labor force
8.0% 7.9% 58.5%
7.6%
58.0%
57.7%
7.5% 57.7%
57.4% 57.5%
7.0%
7.2% 6.9%
56.8% 57.0%
56.8% 57.1%
56.7% 6.6%
56.8% 6.5%
6.5% 56.5%
6.5%
56.0%
6.0%
Since the 2nd quarter of 2009 unemployment is decreasing, 6.0%
55.5%
hand in hand with an increase in participation rate since the 1st quarter of 2010.
5.5%
Unemployment Rate 55.0%
Participation in the Labor Force
5.0% 54.5%
Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1
CONTINUE
Source: Ministry of Finance
15. Inflation Rate
Rate of change in CPI, yearly average, 2008=100
5%
4.6%
4%
3.3%
3%
2.7%
2.1%
2%
1.4%
1%
0.7%
0.5%
0%
2003 2004 2005 2006 2007 2008 2009 2010
-0.4%
-1%
CONTINUE
Source: Central Bureau of Statistics, Ministry of Finance
16. Inflation Rate
Rate of change in CPI, 12 months average, 2008=100
104
103.1
103
102.5
102.3
102.0
102 101.8
101.3 101.4
101.0
101 100.8
100.3
100 99.8
99.5
99
98
97
May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011
CONTINUE
Source: Central Bureau of Statistics, Ministry of Finance
17. Inflation Rate Worldwide
Annual rate of change in CPI
The Israeli economy demonstrated a high level of stability
3.3%
compared to other countries throughout the global economic crisis
3% 2.7%
2.4% 2.3%
2.2%
1.6% 1.6% 1.7%
1.4%
1.2%
1% 0.7%
0.2%
-0.7% -0.5% -0.3% 0.0%
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-0.9%
-1.4%
-1.7% -1.6%
2009 (left column)
-3% 2010 (right column)
CONTINUE
Sources: Ministry of Finance, IMF
18. Growth of Main GDP Components
for Previous Quarter
Criteria Q1 2011
Real GDP + 4.7%
Business GDP + 5.8%
Exports + 16.0%
Private Consumption + 6.8%
Public Consumption + -5.7%
Investment in Fixed Assets + 23.7 %
NEXT CHAPTER: BALANCES BACK TO CONTENTS
Source: Ministry of Finance
19. Balances
Gross Public Debt
Budget Deficit – Target and Execution
Budget Deficit and General Government Expenditure
Current Account and Net Foreign Debt
Gross Tax Burden
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20. Gross Public Debt
As % of GDP
Since 2003, gross public debt has been on a consistent downward trend, only interrupted by the
105% extraordinary circumstances surrounding the 2009 global economic crisis
99.1%
100% 97.4%
93.8%
95%
90% Global
Economic
84.3%
85% Crisis
79.3%
80% 77.8%
77.1%
76.4%
75%
2003 2004 2005 2006 2007 2008 2009 2010
CONTINUE
Source: Ministry of Finance
21. Budget Deficit – Target and Execution
in NIS million, current prices
2009 Q2 2009 Q3 2009 Q4 2009 Total 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Total 2011 Q1
-500
-1980
-3433 -3579
-5500 -4,452
-6523
-10500
-13,501
-15500
-15396
-16,061
-20500 For the first time in its history,
Israel enacted a biennial budget
-25500
for the years 2009-2010
-30500 In both years, Israel came in -28931
under budget target.
-35500
Quarterly Budget Execution -39,286
-40500
Yearly Budget Execution
Yearly Budget Target -42924
-45500 -44,355
CONTINUE
Source: Ministry of Finance
22. Budget Deficit and
General Government Expenditure
Budget Deficit
6%
(% of GDP) 5.2%
5%
4% 3.7%
General Government Expenditure 3%
(% of GDP) 2.2%
2% 1.8%
46% 0.9%
1%
45.3%
0.0%
45% 0%
44.7%
2 5 2 6 2 7 2 8 2 9 2 1
44%
43.6%
43.0% 43.0%
43% 42.7%
42%
41%
2 5 2 6 2 7 2 8 2 9 2 1 CONTINUE
Source: Ministry of Finance
23. Current Account Balance and
Net Foreign Debt
Since 2003, the current account balance is positive, and is accompanied by a decrease of net foreign debt
30%
24.7% 24.9%
25%
21.0% 21.1%
20%
Current Account Surplus 13.7%
15%
(% of GDP)
10.2%
10%
4.2%
5%
5.1% 1.6%
5.0%
0%
2003 2004 2005 2006 2007 2008 2009 2010
4.0%
3.6%
3.1%
2.9% 2.90%
3.0%
Net Foreign Surplus*
2.3%
2.0%
(% of GDP)
1.2%
1.0% 0.8%
0.0%
2003 2004 2005 2006 2007 2008 2009 2010
CONTINUE
*Current Prices, using a public exchange rate of 1$ = 3.46 NIS
Source: Ministry of Finance.
24. Gross Tax Burden
as % of GDP
38%
36.3%
35.9%
36% 35.4% 35.5%
33.8%
34%
32.5%
32% 31.4%
30%
28%
2 4 2 5 2 6 2 7 2 8 2 9 2 1
OECD countries average: 34.8% (2008 average)
NEXT CHAPTER: INTERNATIONAL COMPARISONS BACK TO CONTENTS
Source: Ministry of Finance, OECD
25. International Comparisons
IMD World Competitiveness Yearbook
WEF Global Competitive Index
Central Bank Interest Rates: Israel and U.S.A
NASDAQ and Tel-Aviv 100 (monthly average)
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26. IMD World Competitiveness
Yearbook 2011
The Institute for Management
Development ranked Israel
17th
out of 59 countries for 2011
(Israel was also ranked 17th in 2010)
CONTINUE
Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
27. IMD World Competitiveness
Yearbook 2011
Information Technology Skills Central Bank policy
Flexible and adaptability Entrepreneurship
CONTINUE
Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
28. IMD World Competitiveness
Yearbook 2011
Total expenditure on R&D (as % of GDP) Scientific Research
Venture Capital Innovative capacity
CONTINUE
Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
29. WEF Global Competitiveness
Index 2010-2011
The World Economic Forum
ranked Israel
24th
out of 139 countries
for 2010-2011
CONTINUE
Source: World Economic Forum, Global Competitiveness Index, 2010-2011
30. WEF Global Competitiveness
Index 2010-2011
Quality of scientific research institutions Utility patents per million population
Strength of investor protection Availability of latest technologies
CONTINUE
Source: World Economic Forum, Global Competitiveness Index, 2010-2011
31. WEF Global Competitiveness
Index 2009-2010
Legal rights index Capacity for innovation
Nature of competitive advantage Firm-level technology absorption
CONTINUE
Source: World Economic Forum, Global Competitiveness Index, 2010-2011
32. Central Bank Interest Rates:
Israel and U.S.A
3.5%
3.25%
The Bank of Israel was the first in the western world to
raise interest since the outburst of the economic crisis.
3.0% 3.00%
The rate was raised gradually from 0.5% to 3.25%
2.5% 2.50%
2.0% 2.00%
1.75%
1.5% 1.50%
1.25%
1.0% 1.00%
0.75% Bank of Israel Rate (BOI)
0.5% 0.50%
U.S. Federal Funds Rate (FED) = 0%
0.0%
CONTINUE
Source: Bank of Israel (BOI), Federal Reserve
33. NASDAQ & Tel Aviv 100
monthly average
4,000.00 1300.00
Tel Aviv 100 corresponds with the 1200.00
NASDAQ to current events
3,500.00
1100.00
1000.00
3,000.00
900.00
2,500.00 800.00
700.00
2,000.00
600.00
500.00
1,500.00 Nasdaq (left scale)
Tel Aviv 100 (right scale) 400.00
1,000.00 300.00
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NEXT CHAPTER: ISRAEL AND THE OECD BACK TO CONTENTS
Source: Ministry of Finance
34. Israel and the OECD
Israel was invited as a full member in the OECD on May 10th, 2010, and officially
joined in September 10th, 2010.
Expenditure on R&D
Real GDP Growth
GDP per Capita
Unemployment
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35. Expenditure on R&D
As % of GDP, 2008, or latest available year
5%
4.27%
Israel is ranked 1st of all OECD countries by expenditure on R&D (research & development)
4%
as a percentage of GDP (4.27 %), demonstrating innovation, development and creativity.
4%
3%
3% 2.28%
2%
2%
1%
1%
0%
CONTINUE
Source: OECD
36. Real GDP Growth
3-year average at end of period
12%
Israel’s 3-year average growth rate is higher then most OECD members.
10% For Israel’s year-on-year graph, see slide no.7
8%
6%
4.83%
4%
2.13%
2%
0%
CONTINUE
Source: OECD
37. GDP per capita
Current prices and PPP’s, 2009
90,000
80,000 Although no comparable data for 2010 exists, it is reasonable to assume a diminishing
gap between Israel and the OECD average
70,000
For Israel’s adjusted PPP GDP Per Capita, see slide no.4
60,000
50,000
40,000
33,082
30,000 27,661
20,000
10,000
0
CONTINUE
Source: OECD
38. Unemployment Rate
Average 2006-2008, or latest available period
12
Israel’s unemployment rate is in an ongoing downtrend, reaching an historic low
10 level of 5.8% in April 2011. During the last global economic crisis, Israel
experienced a relatively mild increase in unemployment rates.
8 For Israel’s unemployment, see slide no.14 7.27
6.00
6
4
2
0
NEXT CHAPTER: INTERNATIONAL AGREEMENTS BACK TO CONTENTS
Source: Ministry of Finance, OECD
39. International Agreements
Israel’s Free Trade Agreements
Avoidance of Double Taxation Agreements
Cooperation in Industrial R&D Agreements
Bilateral Investment Treaties
International Organization Memberships
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40. Israel’s Free Trade Agreements
1985 USA
1992 EFTA QIZ Agreements
1997 Turkey
Egypt (2004)
1997 Canada
Jordan (1998)
1999 Mexico
2000 European Union (Association Agreement)
2007 MERCOSUR (Argentina not yet in force)
CONTINUE
Source: Ministry of Finance
41. Avoidance of Double
Taxation Agreements
Austria Croatia Hungary
Belarus Denmark India
Belgium Estonia Ireland
Brazil Ethiopia Italy
Bulgaria Finland Jamaica
Canada France Japan
China Germany Latvia
Czech Republic Greece Lithuania
CONTINUE
Source: Ministry of Finance
42. Avoidance of Double
Taxation Agreements
Luxembourg Russia Taiwan
Mexico Singapore Thailand
Moldova Slovakia Vietnam
Norway Slovenia Turkey
Netherlands South Africa Ukraine
Philippines South Korea United kingdom
Portugal Spain Uzbekistan
Poland Sweden U.S.A
Romania Switzerland CONTINUE
Source: Ministry of Finance
43. Cooperation in Industrial R&D
Agreements
Austria India Sweden
Belgium Ireland United kingdom
Canada Italy U.S.A
China Korea Victoria (Australia)
Finland Netherlands Czech Republic
France Portugal
Germany Singapore
Hong Kong Spain
CONTINUE
Source: Ministry of Finance
44. Bilateral Investment Treaties
Albania Cyprus Hungary*
Argentina Czech Republic India
Armenia El Salvador Kazakhstan
Azerbaijan Estonia Korea
Belarus Ethiopia Latvia
Bulgaria Georgia Lithuania
China Germany Macedonia*
Croatia* Guatemala Moldova
CONTINUE
* See comments in the Bilateral Investments Treaties page in our website
Source: Ministry of Finance
45. Bilateral Investment Treaties
Mongolia South Africa*
Montenegro Thailand
Peru* Turkey
Poland Turkmenistan
Romania* Ukraine*
Serbia Uzbekistan
Slovakia Vietnam*
Slovenia*
CONTINUE
* See comments in the Bilateral Investments Treaties page in our website
Source: Ministry of Finance
46. Main International Economic
Organizations Membership:
Israel is a member in leading international economic organizations:
• United Nations Organizations
• United Nations Agencies
• World Bank Group
• International Monetary Fund
• OECD
• Regional Organizations
• Inter-Governmental Organizations
NEXT CHAPTER: RELEVANT SITES BACK TO CONTENTS
Source: Ministry of Finance
47. Relevant Sites
Ministry of Finance
Bank of Israel
Central Bureau of Statistics
Israeli Government Portal
Israel Securities Authority
Ministry of Industry, Trade and Labor
Ministry of Foreign Affairs
CONTACT US BACK TO CONTENTS
48. WE WELCOME YOUR FEEDBACK
Mr. Roni Hershkovitz
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