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Economic Highlights Presentation4th Quarter 2011
STATE OF ISRAELMINISTRY OF FINANCEInternational Affairs Department
In any case of information derived from sources external to the Ministry of Finance, such sources are mentioned at the bottom of each item
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4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
Table of Contents
Main Economic Indicators
GDP and Business GDP
Major GDP Components
Exports of Goods and Services
Foreign Investments
Unemployment and Participation
Consumer Price Index
Inflation Rate
Economic Figures
Main Trading Partners
Israel’s Credit Ratings
Gross Domestic Capital Formation
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4
Economic Figures
* Using a public exchange rate of 1USD=3.7NIS (2010 average) ** Estimated
Criteria 2009 2010 2010 Q4 2011 Q1 2011 Q2 2011 Q3
GDP(constant prices, 2005, in $B)*
189.9 199.0 50.9 51.5 51.9 52.4
Real GDP growth rate(% change)
0.8% 4.8% 7.2% 4.7% 3.5% 3.4%
GDP per capita, based on PPP(Current international $)
28,526$ 29,901$ -- -- -- --
GDP per capita growth rate (%, 2005 prices)
-0.9% 2.9% 8.6% 5.2% 2.6% 5.3%
Exports (goods & services), $B*(As % of GDP)
75.139.5%
85.342.9%
22.143.4%
22.543.7%
22.643.5%
21.541.0%
Imports (goods & services), $B*(As % of GDP)
71.037.4%
80.040.2%
20.740.7%
21.942.5%
22.443.2%
22.042.0%
Unemployment rate 7.6% 6.6% 6.5% 6.0% 5.5% 5.6%
Additional Sources: IMF
5
Economic Figures
Criteria 2005 2006 2007 2008 2009 2010
Public debt(As % of GDP)
93.8% 84.3% 77.8% 77.1% 79.3% 76.3%
General government expenditure (As % of GDP)
45.3% 44.7% 43.6% 43.0% 43.0% 42.6%
Current account surplus(As % of GDP)
3.1% 5.1% 2.9% 0.9% 3.6% 2.9%
Inflation rate(CPI, yearly average, % change)
1.4% 2.1% 0.5% 4.6% 3.3% 2.7%
Budget deficit(As % of GDP)
1.8% 0.9% 0.0% 2.2% 5.2% 3.7%
6
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2010
Q4
2011
Q1
2011
Q2
2011
Q3
-3%
-1%
1%
3%
5%
7%
9%
11%
-0.3%
-0.6%
1.5%
4.8% 4.9%
5.6% 5.5%
4.0%
0.8%
4.8%
7.2%
4.7%
3.5% 3.4%
-1.2%-1.0%
2.3%
6.1%
6.8% 6.8%
6.1%
4.5%
0.4%
5.8%
8.6%
5.2%
2.6%
5.3%
GDP Business GDP
GDP and Business GDPAnnual rate of change, constant prices, 2005
In 2010, Israel has recovered from the global economic crisis, and is back to previous years’ growth rates. In the 3rd quarter of 2011, business GDP recovered sharply.
7
Major GDP ComponentsAnnual rate of change, constant prices, 2005
2006
2007
2008
2009
2010
-15%
-10%
-5%
0%
5%
10%
15%
20%
4.2%
6.3%
2.8%1.4% 1.4%
3.0% 3.3%2.1% 2.2% 2.2%
13.1%14.5%
4.4%
-5.8%
13.7%
5.5%
9.2%
6.6%
-12.5%
13.6%
Private Consumption
Public Consumption
Investment in Fixed Assets
Exports of Goods and Services
Global economic crisis
8
Exports of Goods and ServicesUS $ Billions, constant prices, 2005
2003
2004
2005
2006
2007
2008
2009
2010
0
10
20
30
40
50
60
70
80
90
30.1936.66 39.77 43.32
50.2957.71
46.3356.09
13.39
16.0317.45
19.27
21.13
24.09
21.98
24.23
Services Goods
* Using a public exchange rate of 1USD=3.7NIS (2010 average)
Global economic crisis
9
Main Trading PartnersUS $ Billions, 2010
USA
China
*
Belgium
& Lux
embo
urg
India UK
Nethe
rland
s
Germ
any
Turk
ey
Fran
ceIta
ly0
2
4
6
8
10
12
14
16
18
2018.5
6.0
3.1 2.92.3 1.8 1.7 1.3 1.3 1.3
Exports
* Since July 1997 the data on trade with Hong-Kong is added to the data on China
Additional Sources: Central Bureau of Statistics
USA
China
*
Germ
any
Switz
erland
Italy UK
Nethe
rland
sIn
dia
Turk
ey
Japa
n0
1
2
3
4
5
6
7
8
6.76.1
3.73.2
2.4 2.2 2.1 1.8 1.8 1.8
Imports
10
Main Trading PartnersUS $ Billions, 2010
Additional Sources: Central Bureau of Statistics
2007 2008 2009 20100.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
19.2
21.9
15.4
18.9
9.612.0
9.3
12.9
19.921.2 17.6 19.6
Exports
EuropeAsiaNorth Amer-ica
2007 2008 2009 20100.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
26.829.7
22.9
26.5
11.713.2
9.8
13.0
8.3 8.76.3 7.3
Imports
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Gross Domestic Capital Formation
16%
17%
18%
19%
20%
21%
19.2%
18.0%
17.6%
18.9%
19.3%
20.3%
19.6%
17.9%18.1%
As % of GDP
12
Foreign InvestmentsUS $ Billions
2002
2003
2004
2005
2006
*20
0720
0820
0920
100
5
10
15
20
25
4.94.3
9.58.3
19.4
14.4
10.8 10.7
17.6
1.6
3.32.4
4.3
15.3
8.8
10.9
4.45.2
Total Investments Direct Investments
* 2006 is exceptional due to a large acquisition by Teva Pharmaceutical Industries Ltd.
13
Unemployment and ParticipationAs % of total labor force
Q4 2009 Q1
Q2 Q3 Q4 2010 Q1
Q2 Q3 Q4 2011 Q1
Q2 Q34%
5%
6%
7%
8%
9%
54%
55%
56%
57%
58%
59%
6.4%
7.5%
7.9%
7.6%
7.2%
6.9%
6.5% 6.6%6.5%
6.0%
5.5% 5.6%
56.8%57.0%
56.8% 56.8% 56.8% 56.7%
57.2%
57.7% 57.7%57.5% 57.5% 57.4%
Unemployment Rate
Participation in the Labor Force
Since the 2nd quarter of 2009 unemployment is relatively decreasing, hand in hand with a relative increase in participation rate since the 1st quarter of 2010.
14
Consumer Price IndexLast 24 monthly averages, 2010=100
95
96
97
98
99
100
101
102
103
104
105
99.199.1
98.598.298.3
99.299.5
99.8100.3
100.8101.0101.3101.4
101.8102.0102.3102.5
103.1103.6
104.0104.1104.0104.2103.7
104.0
Additional Sources: Central Bureau of Statistics
15
Inflation RateRate of change in consumer price index, yearly average
2003
2004
2005
2006
2007
2008
2009
2010
-1%
0%
1%
2%
3%
4%
5%
0.7%
-0.4%
1.4%
2.1%
0.5%
4.6%
3.3%
2.7%
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Israel’s Credit RatingsOverseas Bonds
ForecastDomestic Bonds
Term Rating FirmRating Rating
A1Stable
A1 LongMoody's
P1 - Short
A+Stable
AA- Long Standard & Poor'sA-1 A-1+ Short
AStable
A+ LongFitch
F1 - Short
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1
4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
18
International Comparisons
Budget Deficit
Current Account Surplus
General Government Expenditure
Net Foreign Surplus
Gross Public Debt
Gross Tax Burden
19
Gross Public DebtAs % of GDP
70%
75%
80%
85%
90%
95%
100%
105%
99.1%
97.4%
93.8%
84.3%
77.8%77.1%
79.3%
76.3%
Since 2003, gross public debt has been on a consistent downward trend, only interrupted by the extraordinary circumstances surrounding the 2009 global economic crisis.
Global economic crisis
20
Budget DeficitAs % of GDP
0%
1%
2%
3%
4%
5%
6%
5.2%
3.5%
1.8%
0.9%
0.0%
2.2%
5.2%
3.7%
21
-50,000
-40,000
-30,000
-20,000
-10,000
0
-16,061
-3,626
-6,721
-3,657
-16,161
1,071
-6,371-4,862
-39,286
-30,165
-44,355-42,924
Quarterly Budget Execution Yealy Budget Execution
Budget DeficitTarget and execution in NIS million, current prices
For the first time in its history, Israel enacted a biennial budget for the years 2009-2010. In both years, Israel came in under budget target. The proven effectiveness and functionality of the biennial budget have led the government to adopt the biennial budget for a second period through 2011-2012.
22
General Government ExpenditureAs % of GDP
38%
39%
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
50%
51%50.1%
47.3%
45.3%
44.7%
43.6%
43.0% 43.0%42.6%
23
Current Account SurplusAs % of GDP
0%
1%
2%
3%
4%
5%
6%
1.2%
2.3%
3.1%
5.1%
2.9%
0.9%
3.6%
2.9%
24
Net Foreign SurplusAs % of GDP
0%
5%
10%
15%
20%
25%
30%
1.7%
4.5%
10.9%
14.7%
22.5% 22.6%
26.3% 26.6%
* Using a public exchange rate of 1USD=3.7NIS (2010 average)
25
Gross Tax BurdenAs % of GDP
30%
31%
32%
33%
34%
35%
36%
37%
35.5% 35.5% 35.6%35.9%
36.2%
33.8%
31.4%
32.4%
Additional Sources: OECD
OECD countries average: 34.8%(2008 average)
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1
4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
27
International Comparisons
Inflation Rates
Israel on WEF Rankings
Israel on IMD Rankings
Interest Rates: Israel & the U.S.
GDP Growth
Stock Indices: NASDAQ & Tel-Aviv 100
28
GDP GrowthIsrael compared to advanced economies, annual rate of change, constant prices
2004
2005
2006
2007
2008
2009
2010
-4%
-2%
0%
2%
4%
6%
8%
4.8% 4.9%
5.6% 5.5%
4.0%
0.8%
4.8%
3.1%2.7%
3.1%2.8%
0.1%
-3.7%
3.1%
Israel Advanced Economies
Additional Sources: IMF
Since 2004, Israel’s growth rate has exceeded the average growth rate of advanced economies.
In 2009, as most of the world experienced a decline in GDP, Israel experienced a 0.8% growth in it’s GDP.
29
Inflation RatesRate of change in consumer price index, yearly average
Additional Sources: IMF
Israe
l
Advan
ced
Econ
omies
Finland
Germ
any
Ireland
Japa
n
Norway
Portu
gal
Switz
erland
Unite
d St
ates
-2%
-1%
0%
1%
2%
3%
4%
3.3%
0.1%
1.6%
0.2%
-1.7%
-1.4%
2.2%
-0.9%
-0.5%-0.3%
2.7%
1.6%1.7%
1.2%
-1.6%
-0.7%
2.4%
1.4%
0.7%
1.6%
2009 (dark) 2010 (bright)
The Israeli economy demonstrated high stability compared to other countries throughout the global economic crisis.
The Institute for Management Development
ranked Israel 17th out of 59 countries for
2011 (Israel was also ranked 17th in 2010)
Israel on IMD RankingsIMD World Competitiveness Yearbook 2011
Additional Sources: IMD World Competitiveness Yearbook 201130
Information technology skills Central bank policy
EntrepreneurshipFlexible and adaptability
Israel on IMD RankingsIMD World Competitiveness Yearbook 2011
Additional Sources: IMD World Competitiveness Yearbook 201131
Total expenditure on R&D (as % of GDP) Scientific research
Innovative capacityVenture capital
Israel on IMD RankingsIMD World Competitiveness Yearbook 2011
Additional Sources: IMD World Competitiveness Yearbook 201132
Israel on WEF RankingsWorld Economic Forum Global Competitiveness Index 2011-2012
Additional Sources: World Economic Forum Global Competitiveness Index 2011-2012
The World Economic Forum ranked Israel
22nd out of 142 countries for 2011-2012
33
Quality of scientific research institutions Venture capital availability
Strength of investor protectionUtility patents per million population
Israel on WEF RankingsWorld Economic Forum Global Competitiveness Index 2011-2012
Additional Sources: World Economic Forum Global Competitiveness Index 2011-201234
Government procurement of advanced technology products
Capacity for innovation
University-industry collaboration in R&D Firm-level technology absorption
Israel on WEF RankingsWorld Economic Forum Global Competitiveness Index 2011-2012
Additional Sources: World Economic Forum Global Competitiveness Index 2011-201235
36
Interest Rates: Israel & the U.S.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
1.25%
1.50%
1.75%
2.00%
2.50%
3.00%
3.25%
3.00%
2.75%
Bank of Israel
=0
The Bank of Israel was the first in the western world to raise interest since the outburst of the economic crisis. The rate was raised gradually from 0.5% to 3.25%.
37
Stock Indices: NASDAQ & Tel-Aviv 100
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2,900
3,000
Tel Aviv 100 NASDAQ
Tel Aviv 100 corresponds with the NASDAQ to current events, with relatively stable reactions.
38
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1
4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
39
Israel in the OECD
Real GDP Growth
Unemployment
GDP per Capita
Expenditure on R&D
Israel was invited as a full member in the OECD on May 10th, 2010, and officially joined in Sep. 10, 2010.
40
Expenditure on R&DAs % of GDP, 2010 or latest available year
Additional Sources: OECD
0%
1%
2%
3%
4%
5%
6%
4.25%
2.33%
Israel is 1st in the OECD in expenditure on R&D (research & development) as % of GDP, demonstrating innovation, development and creativity.
41
Real GDP Growth3-year average, end of period
Additional Sources: OECD
Esto
nia
Icelan
dIta
ly
Finland
Japa
n
Slov
enia
Fran
ce
Norway
Nethe
rland
s
Germ
any
Austri
a
Czech
Rep
ublic
Russia
n Fe
dera
tion
Luxe
mbo
urg
Switz
erland
Sout
h Afri
ca
Austra
lia
Kore
a
Poland
Indo
nesia
China
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
-0.10%
3.19%
Israel’s 3-year average growth rate is higher then most OECD members.
42
GDP per CapitaU.S $, Current prices, PPP, 2010
Additional Sources: OECD
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
28,510
34,025
43
Unemployment Rate3-year average 2008-2010, or latest available period
Additional Sources: OECD
0%
5%
10%
15%
20%
25%
7.1%7.7%
Israel’s unemployment rate is in an ongoing downtrend, reaching an historic low level of 5.5% in Q2 2011.
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1
4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
45
International Agreements
Avoidance of Double Taxation
Bilateral Investment Treaties
Cooperation in Industrial R&D
Israel’s Free Trade Agreements
Economic Organizations
46
Israel’s Free Trade Agreements
QIZ Agreements1985
1992
1997
1997
1999
2000
2007
USA
EFTA
Turkey
Canada
Mexico
European Union (Association Agreement)
MERCOSUR
2004
1998
Egypt
Jordan
More extended information is available in the Israel Ministry of Finance website
47
Avoidance of Double Taxation
More extended information is available in the Israel Ministry of Finance website
Austria
Belarus
Belgium
Brazil
Bulgaria
Canada
China
Czech Republic
Croatia
Denmark
Estonia
Ethiopia
Finland
France
Germany
Greece
Hungary
India
Ireland
Italy
Jamaica
Japan
Latvia
Lithuania
Luxembourg
Mexico
48
Avoidance of Double Taxation
More extended information is available in the Israel Ministry of Finance website
Moldova
Norway
Philippines
Portugal
Poland
Romania
Russia
Singapore
Slovakia
Slovenia
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Netherlands Turkey
Ukraine
United kingdom
Uzbekistan
U.S.A
Taiwan
Vietnam
Malta
Panama
49
Cooperation in Industrial R&D
More extended information is available in the Israel Ministry of Finance website
North America New YorkMassachusettsMarylandVirginiaWisconsinColoradoIllinoisOregonBIRD (Foundation)Ontario CIIRDF (Foundation)
South America ArgentinaUruguayBrazil
Australia(Victoria)
Europe FranceRussia (Rusano, Skolkovo)ItalyGermanyGreeceCzech RepublicBulgariaLithuania SloveniaDenmarkHungaryTurkeyPortugalFinlandSwedenIreland
* Through EUREKA (40 country Multilateral Initiative)
Asia China( Shanghai, Jiangsu, Most)IndiaTaiwan
SIIRD-Singapore (Foundation)KORIL-RDF-Korea (Foundation)
50
Bilateral Investment Treaties
Albania
Argentina
Armenia
Azerbaijan
Belarus
Bulgaria
China
Croatia
India
Kazakhstan
Latvia
Lithuania
Germany
Cyprus
Czech Republic
El Salvador
Estonia
Georgia
Guatemala
Ethiopia
Hungary
Macedonia
Korea
Moldova
More extended information is available in the Israel Ministry of Finance website
51
Bilateral Investment Treaties
South Africa
Thailand
Turkey
Turkmenistan
Ukraine
Uzbekistan
Slovakia
Slovenia
Serbia
Mongolia
Poland
Romania
Montenegro
Peru
Vietnam
More extended information is available in the Israel Ministry of Finance website
52
Economic OrganizationsMembership in main international economic organizations
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
More extended information is available in the Israel Ministry of Finance website
53
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3
1
4
Table of Contents
6
7
5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
54
Learn More
Visit the Israel Ministry of Finance
English website for more information:
Economic Overview of Israel
Other publications and reports on the Israeli economy
Ministry of Finance publications and reports
About the Ministry
Ministry press releases
55
Learn More
Bank of Israel
Ministry of Foreign Affairs
Ministry of Industry, Trade and Labor
Israel Central Bureau of Statistics
Israel Government Portal
Click to open:
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Table of Contents
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5
Balances
International Comparisons
Main Economic Indicators
Israel in the OECD
Learn More
Contact
International Agreements
57
Contact
Mr. Roni HershkovitzMr. Assaf LuxembourgMr. Jonah Balakhaneh
Overseas Economic InformationInternational Affairs DepartmentMinistry of FinanceState of Israel
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