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Economic Highlights Presentation
2nd Quarter 2013 ( As of July 1th)
STATE OF ISRAEL
MINISTRY OF FINANCE
Chief Economist Department – Research, State Revenue & International Affairs
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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Table of Contents
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2
Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
3
Economic Figures
*Using a periodic average exchange rate. ** For available months
Criteria 2011 2012 2012 Q2 2012 Q3 2012 Q4 2013Q1 2013Q2
GDP (Current prices in $B)*
243.9 240.9 60.5 59.8 60.8 63.8 -
Real GDP growth rate (% change)
4.6% 3.2% 2.6% 2.8% 2.6% 2.7% -
GDP per capita (Current $)
31,419$ 30,476$ 7,685$ 7,547$ 7,643$ 7,893$ -
GDP per capita growth rate (%, 2005 prices)
2.7% 1.3% 0.9% 0.9% 0.5% 0.9% -
Exports (goods & services), $B* (As % of GDP)
91.0 37.3%
90.1 37.4%
24.0 39.6%
21.9 36.7%
22.4 36.7%
22.5 35.2%
-
Imports (goods & services), $B* (As % of GDP)
92.2 37.8%
92.7 38.5%
23.7 39.1%
23.0 38.4%
21.7 35.6%
21.5 33.6%
-
Unemployment rate** 7.1% 6.9% 6.9% 6.8% 6.8% 6.6% 6.9%
Sources: CBS, IMF
4
Economic Figures
Criteria 2007 2008 2009 2010 2011 2012
Public debt (As % of GDP)
78.6% 77.4% 79.6% 76.3% 74.0% 73.2%
General government expenditure (As % of GDP)
45.2% 44.3% 44.5% 43.8% 43.4% 43.4%
Current account surplus (As % of GDP)
3.2% 1.4% 4.1% 3.3% 1.3% 0.4%
Inflation rate (CPI, yearly average, % change)
0.5% 4.6% 3.3% 2.7% 3.5% 1.7%
Budget deficit (As % of GDP)
0.0% 2.2% 5.1% 3.7% 3.3% 4.2%
* MoF Estimates
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
6
4.1%
1.1%
5.0% 4.6%
3.2% 2.9%
2.6% 2.8%
2.6% 2.7%
4.4%
0.5%
5.4% 5.1%
3.3% 3.2% 2.9% 2.9%
3.5%
2.2%
-3%
-1%
1%
3%
5%
7%
9%
11%
GDP Business GDP
GDP and Business GDP Annual rate of change, constant prices, 2005
7
GDP Growth Israel compared to advanced economies, annual rate of change, constant prices
Source: CBS, OECD Stat
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 1.1% growth in it’s GDP.
1.5%
4.9% 4.9% 5.8% 5.9%
4.1%
1.1%
5.0% 4.6%
3.1% 3.8%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
OECD Euro Area U.S Israel
* MoF forecast, Euro stat and OECD forecast
8
GDP Components Real Annual Percentage Change
1.6% 1.9%
5.3%
3.8% 2.7% 2.4% 2.6% 2.9% 2.9%
3.4% 4.6%
-3.1%
12.2%
16.0%
4.0%
7.1%
-12.3%
13.5%
5.5%
0.1%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Private Consumption
Public Consumption
Investment in Fixed Assets
Exports of Goods and Services
Effects of the global economic crisis
9
GDP per Capita $ U.S, Current prices, Current PPP, 2012
Additional Sources: OECD
35.0
28.0
0
10
20
30
40
50
60
70
80
90
100
10
Output Gap As percentage of Potential GDP, 2012
Additional Sources: OECD Estimates
1.4%
-2.9%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
Isra
el
Pola
nd
Slo
vak R
epublic
Chile
Canada
Norw
ay
Mexic
o
Fin
land
Germ
any
Sw
eden
Est
onia
Kore
a
Aust
ralia
Sw
itze
rland
Belg
ium
Luxem
bourg
Turk
ey
Japan
United K
ingdom
New
Zeala
nd
Aust
ria
Cze
ch R
epublic
OECD
Neth
erlands
Fra
nce
Slo
venia
Denm
ark
United S
tate
s
Euro
are
a
Hungary
Italy
Icela
nd
Port
ugal
Irela
nd
Spain
Gre
ece
The actual - potential GDP Difference. Positive index means that actual output is higher than potential.
11
2.1%
12.7% 12.6%
-1.3%
5.4%
-13.2%
4.9%
8.2%
10.0%
-0.5%
8.7%
-3.6%
-15%
-10%
-5%
0%
5%
10%
15%
TA100 NASDAQ S&P 500 EuroStoxx 50 FTSE EEM
2013*
2013Q2
Stock Exchange Indices Percentage Change, end of period relative to end of previous period
Additional Sources: TASE, Bloomberg
* The change since the beginning of 2013 till the end of the specified quarter.
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
30.2% 30.2% 30.5% 28.6%
24.0% 25.9% 26.3% 25.5%
12.6% 12.6% 12.2% 11.9%
11.0% 11.3% 11.0% 11.9%
0%
10%
20%
30%
40%
50%
2005 2006 2007 2008 2009 2010 2011 2012
Services
Goods
13
Exports of Goods and Services As a share of GDP
Effects of the global economic crisis
14
Main Trading Partners $ US Billions, 2012
19.3
8.0
3.7 3.3 3.0 2.1 2.0 1.8 1.5 1.3
0
5
10
15
20
25Exports
* The data on trade with Hong-Kong is added to the data regarding China
Source: Central Bureau of Statistics
8.7
7.3
4.5 4.6 4
3 2.8 2.7 2.4
2.1
0
1
2
3
4
5
6
7
8
9
10 Imports
15
Main Export Destinations As a share of total exports
Source: Central Bureau of Statistics
32.1% 32.3% 34.7% 34.0% 37.9%
19.9% 23.6%
24.3% 25.2% 24.6%
36.8% 33.5% 30.4% 29.8%
27.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013*
North America Asia Europe
* Relates to January-April 2013
16
Current Account Surplus As % of GDP
1.2%
2.3%
3.1%
4.8%
3.2%
1.4%
4.1%
3.3%
1.3%
0.4%
0%
1%
2%
3%
4%
5%
6%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Central Bureau of Statistics
17
Foreign Investments $ US Billions
4.3
10.4
7.9
27.1
14.4
10.8 10.8
18.2
7.0
2.3 3.3 2.9
4.8
15.3
8.8
10.9
4.4 5.5
10.8 9.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2003 2004 2005 2006* 2007 2008 2009 2010 2011 2012
Total Investments Direct Investments
* In 2006, a large acquisition by Teva Pharmaceutical Industries Ltd. was included in the data.
Source: Central Bureau of Statistics
14.4%
13.4%
7.8%
7.5%
7.4%
6.9%
5.7%
3.2%
3.2%
1.3%
-1.5%
-2.5%
JPY
AUD
BRL
RUB
KRW
GBP
CAD
TWD
CHF
EUR
CNY
ILS
18
Exchange Rates 30 June 2013 vs 31 December 2012
Source: Pacific Exchange Rate Service
The change in the specified currency relative to the $ US
A decrease means an appreciation of the specified currency relative to the $ US
19
90
95
100
105
110
115
Mar-
09
May-0
9
Jul-09
Sep-0
9
Nov-0
9
Jan-1
0
Mar-
10
May-1
0
Jul-10
Sep-1
0
Nov-1
0
Jan-1
1
Mar-
11
May-1
1
Jul-11
Sep-1
1
Nov-1
1
Jan-1
2
Mar-
12
May-1
2
Jul-12
Sep-1
2
Nov-1
2
Jan-1
3
Mar-
13
Terms of Trade = Export Prices to Import Prices Ratio
Source: Central Bureau of Statistics
Terms of Trade 2005 average = 100
20
Israel’s Free Trade Agreements
QIZ Agreements 1985
1993
1997
1997
2000
2000
2007
USA
EFTA
Turkey
Canada
Mexico
European Union (Association Agreement)
MERCOSUR
2004
1998
Egypt
Jordan
More comprehensive information is available on the Israel Ministry of Finance website
21
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*
Korea
Moldova
*Comprehensive information is available on the Israel Ministry of Finance website
Macedonia*
22
Bilateral Investment Treaties
*Comprehensive information is available on the Israel Ministry of Finance website
South Africa*
Thailand
Slovakia
Slovenia*
Serbia
Poland
Romania
Montenegro
Turkey
Turkmenistan
Ukraine*
Uzbekistan
Uruguay
23
Economic Organizations Membership in main international economic organizations
Israel is a member of leading international economic organizations:
• United Nations Organizations
• United Nations Agencies
• World Bank Group
• International Monetary Fund
• OECD
• Regional Organizations
• Inter-Governmental Organizations
More comprehensive information is available on the Israel Ministry of Finance website
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
25
Unemployment and Participation As % of total labor force
9.1% 8.7%
8.3% 8.3%
8.1%
7.6%
7.0% 7.0% 6.8% 6.9% 6.9%
6.8% 6.8%
6.6%
6.9%
62.0% 61.9%
62.4%
62.9%
62.9% 62.7%
62.7%
62.7%
62.6% 62.8%
63.6%
64.1%
63.7% 63.7%
63.7%
60%
61%
62%
63%
64%
65%
5%
6%
7%
8%
9%
10%
2009Q4
2010Q1
Q2 Q3 Q4 2011Q1
Q2 Q3 Q4 2012Q1
Q2 Q3 Q4 2013Q1
Q2*
Unemployment Rate
Participation in the Labor Force
Source: Central Bureau of Statistics
Since the 2nd quarter of 2009 unemployment is relatively decreasing, with a gradual increase in the participation rate since the beginning of 2010.
*Available data.
26
Unemployment Rate Latest available data
Additional Sources: OECD
8.0%
6.9%
0%
5%
10%
15%
20%
25%
27
143.9
-5.9
20.9
49.3
75.9
99.8
85.9
116.5
101.8
69.1
104.5
92.9
107.7
55.5
-20
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
Effects of the global economic crisis
Job Creation Change in the number of employees
Annual average relative to previous year average.
* April to May average.
Source: Central Bureau of Statistics
59.6% 55.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
28
Employment Rate 15+, latest available quarterly data
Additional Sources: OECD, Euro Stat
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
30
General Government Expenditure As % of GDP
48.5%
46.6%
46.1%
45.2%
44.3% 44.5%
43.8%
43.4% 43.4%
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
Source: Central Bureau of Statistics
31
General Government Tax Burden As % of GDP
35.6% 35.8%
36.1%
36.5%
33.9%
31.5%
32.6% 32.8%
31.7%
30%
31%
32%
33%
34%
35%
36%
37%
OECD countries average: 33.8% (2011 average)
Source: Central Bureau of Statistics, OECD
32
General and Central Budget Deficit As % of GDP
3.5%
1.8%
0.9%
0.0%
2.2%
5.2%
3.7%
3.3%
4.2%
4.2%
2.6%
1.2%
0.6%
2.6%
5.6%
3.7%
3.3%
4.5%
0%
1%
2%
3%
4%
5%
6%
Central Government
General Government
33
Public Debt As % of GDP
93.9%
85.1%
78.6% 77.4%
79.6%
76.3%
74.0% 73.2%
70%
75%
80%
85%
90%
95%
100%
Effects of the global economic crisis
34
Public Debt As % of GDP, international comparison
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
220%
240%
Japan
Gre
ece
Italy
Port
ugal
Icela
nd
Irela
nd
United S
tate
s
OECD
United K
ingdom
Fra
nce
Belg
ium
Euro
are
a
Spain
Germ
any
Hungary
Canada
Aust
ria
Neth
erlands
Isra
el
Pola
nd
Fin
land
Denm
ark
Slo
venia
Slo
vak R
epublic
New
Zeala
nd
Cze
ch R
epublic
Sw
eden
Norw
ay
Sw
itze
rland
Kore
a
Luxem
bourg
Aust
ralia
Est
onia
2007 Debt to GDP Ratio Change from 2007 to 2012
Israel: 78.2% (2007) 73.2% (2012)
OECD average: 74.2% (2007) 108.7% (2012)
Source: OECD
35
Israel’s Credit Ratings
Overseas Bonds Forecast
Domestic Bonds Term Rating Firm
Rating Rating
A1 Stable
A1 Long Moody's
P1 - Short
A+ Stable
A+ Long Standard & Poor's
A-1 A-1+ Short
A Stable
A+ Long Fitch
F1 - Short
Updated to mid-September, 2012
1996 1998 2000 2002 2004 2006 2008 2010 2012
Moody's
S&P
Fitch
A1/A+
A2/A
A3/A-
Baa1/BBB+
Aa3/AA-
Nov 2007 S&P upgrades
Israel To A
April 2008 Moody’s upgrades
Israel To A1
Sep 2011 S&P upgrades Israel To A+
Feb 2008 Fitch upgrades
Israel To A
36
Avoidance of Double Taxation
More comprehensive information is available on the Israel Ministry of Finance website
Austria
Belarus
Belgium
Brazil
Bulgaria
Canada
China
Croatia
Czech Republic
Denmark
Estonia
Ethiopia
Finland
France
Germany
Greece
Hungary
India
Ireland
Italy
Jamaica
Japan
Latvia
Lithuania
Luxembourg
Georgia
Avoidance of Double Taxation
More comprehensive information is available on the Israel Ministry of Finance website
Moldova
Norway
Philippines
Portugal
Poland
Romania
Russia
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sweden
Switzerland
Thailand
Netherlands Turkey
Ukraine
UK
Uzbekistan
USA
Taiwan
Vietnam
Mexico
South Korea Panama
37
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Foreign Trade and Balance of Payment
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
39
Inflation Rate Rate of change in consumer price index
2.39%
-0.10%
3.40% 3.80%
3.91%
2.66%
2.17%
1.63%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Dotted lines represent BoI Inflation Target range
Source: Central Bureau of Statistics
40
-2%
0%
2%
4%
6%
8%
10%
12%
14%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Real Interest Rate Nominal Interest Rate Inflation Expectaions
Interest Rate
Source: Bank of Israel
41
2.75%
2.50% 2.50%
1.25%
1.00%
0.50% 0.50%
0.25% 0.25%
0.10% 0%
1%
2%
3%
Australia SouthKorea
NewZealand
Israel Canada Euro Area UnitedKingdom
UnitedStates
Switzerland Japan
Central Bank’s Interest Rates International Comparison
Source: Specified Countries’ Central Banks
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Foreign Trade and Balance of Payments
Labor Market
Real Economy
Fiscal Stance
Innovative Economy
Learn More
Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
43
7.3%
1.9%
2.8%
0.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
High Tech Mid-High Tech Mid-Low Tech Low Tech
Total industrial production grew by 3.9%
Industrial Production Annual Growth, 2013 average relative to 2004 average
Source: Central Bureau of Statistics
Industrial Export Current U.S. $ Billions, and the share of high tech and mid high tech sectors in the Israeli goods exports
44
0
5
10
15
20
25
30
35
40
45
50
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
High Tech
Low Tech
73.2% 72.5%
75.3% 75.4%
76.3%
76.7%
77.4%
80.9%
80.3%
80.1% 79.5%
Source: Central Bureau of Statistics
80.6%
* 2013 available months at annual rate
4.4
1.8
1.4
3.9
2.8
2.3
2.0
1.81.9
1.81.7
1.6
1.3
0
1
2
3
4
5
Isra
el
Fin
lan
d
Germ
an
y
Fra
nce
Belg
ium
EU
27
Can
ad
a
Un
ited
Kin
gd
om
Irela
nd
No
rway
Czech
Rep
.
Sp
ain
Italy
45
Israel is a World Leader in Science, Technology, and Innovation
Source: OECD Science, Technology and Industry Scoreboard 2011. * International Institute for Management Development (IMD) Global Competitiveness
Yearbook 2011. ** World Economic Forum (WEF) Global Competitiveness Report 2012-2013.
Civilian R&D as % of GDP, 2009
1st in R&D expenditure as % of GDP*
1st in quality of scientific research institutions**
1st for entrepreneurship being widespread amongst its managers*
2nd in public expenditure on education*
3rd in venture capital availability**
4th in PCT patents applications per million population**
5th for strength of investor protection**
6 Israelis in the last 10 years have been awarded Nobel Prizes in
the fields of Economics or Chemistry
2013-2012Global Competitiveness Report
“The country’s main strengths remain its world-class capacity for innovation
(3rd), which rests on highly innovative businesses that benefit from the presence
of the world’s best research institutions geared toward the needs of the business
sector. Israel’s excellent innovation capacity, which is supported by the
government’s public procurement policies, is reflected in the country’s high
number of patents (4th). Its favorable financial environment, particularly evident
in the ease of access to venture capital (3rd), has contributed to making Israel an
innovation powerhouse..”
The Institute for Management
Development ranked Israel 19th out of
59 countries for 2012.
Israel has been ranked 1st at
entrepreneurship and 9th at economy
resilience.
Israel in IMD Rankings IMD World Competitiveness Yearbook 2013
Source: IMD World Competitiveness Yearbook 2013 46
78.187
78.210
79.150
79.591
80.513
83.145
83.158
83.305
83.514
85.193
85.505
86.197
88.439
89.128
89.585
89.857
90.531
92.783
93.357
100.000
0 10 20 30 40 50 60 70 80 90 100
(2) USA 1
(17) Finland 20
(19) Israel 19
(18) United Kingdom 18
(20) Ireland 17
(15) Australia 16
(14) Malaysia 15
(11) Netherlands 14
(12) Luxemburg 13
(13) Denmark 12
(7) Taiwan 11
(10) Qatar 10
(9) Germany 9
(16) UAE 8
(6) Canada 7
(8) Norway 6
(4) Singapore 5
(5) Sweden 4
(1) Hong Kong 3
(3) Switzerland 2
Israel’s ranking compared to other IMD countries, Business Efficiency and Infrastructure
Israel’s ranking compared to other IMD countries, Economic Performance and Government Efficiency
Israel in IMD Rankings IMD World Competitiveness Yearbook 2012
Source: IMD World Competitiveness Yearbook 2012 47
Israel in WEF Rankings World Economic Forum Global Competitiveness Index 2012-2013
Source: World Economic Forum Global Competitiveness Index 2012-2013
The World Economic Forum ranked Israel 26th
out of 144 countries for 2012-2013 in terms of
competitiveness.
The Forum also ranked Israel:
1st in Quality of scientific research institutions
3rd in Venture capital availability
4th in PCT patents, applications/million pop.
5th in Strength of investor protection
5th in Firm-level technology absorption
6th in Capacity for innovation
6th in Company spending on R&D
And 8th in University-industry collaboration in
R&D 48
49
Cooperation in Industrial R&D
More comprehensive information is available on the Israel Ministry of Finance website
North America New York Massachusetts Maryland Virginia Wisconsin Colorado Illinois Oregon BIRD (Foundation) Ontario CIIRDF (Foundation)
South America Argentina Uruguay Brazil
Australia (Victoria)
Europe France Russia Italy ( and Trento county) Germany Greece Czech Republic Bulgaria Lithuania Slovenia Denmark Hungary Turkey Portugal Finland Sweden Ireland Spain Cyprus Netherlands * Through EUREKA (40 country Multilateral Initiative)
Asia China (Shanghai, Jiangsu, Shenzhen, Federal) India SIIRD-Singapore (Foundation) KORIL-RDF-Korea (Foundation)
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Foreign Trade and Balance of Payment
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Real Economy
Fiscal Stance
Innovative Economy
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Price Stability and Monetary Policy
Table of Contents
1 Main Indicators
9 Contact
Learn More
51
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
Learn More
52
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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Foreign Trade and Balance of Payment
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Price Stability and Monetary Policy
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9 Contact
Contact
54
Mr. Roni Hershkovitz
Mr. Ori Kaufman
Dr. Amichai Fishler
Overseas Economic Information
Economics and State Revenue
Department
Ministry of Finance
State of Israel
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