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STATE OF ISRAEL
                                             MINISTRY OF FINANCE
                                          International Affairs Department

       July 2011

                Economic Highlights
                                                2nd Quarter 2011

             Website: www.financeisrael.mof.gov.il                                             Follow us on Twitter

             Email: financeIsrael@mof.gov.il                                                  Follow us on Linkedin



                                          Table of Contents
Headlines ......................................................................................................................... 1
Latest News ..................................................................................................................... 2
Monetary News and Capital Market ............................................................................... 4
From the Press ................................................................................................................ 5
Environmental Economy News ...................................................................................... 6
Economic Figures ........................................................................................................... 7
We Welcome Your Feedback.......................................................................................... 8


                                                    Headlines

              Raised Growth Forecasts for the Israeli Economy                                                                Page 2


              Robust and Determined: News from Israel's R&D Sector                                                           Page 3


              Moody's, Fitch Left Israel's Ratings Unchanged                                                                 Page 4


              Israel Ranked 17th in IMD World Competitiveness Yearbook 2011                                                  Page 5


              Gallup Survey Finds Israel 7th Most Thriving Country                                                           Page 5


              New and Bigger Desalination Plant to be built in Sorek                                                         Page 6




                                                              -1-
       1 Kaplan St. Jerusalem 91030,                   P.O. Box 3100,           Tel: 02-5317200,        Fax: 02-5695349
       English: www.financeisrael.mof.gov.il                                                   Hebrew: www.mof.gov.il
Latest News
                          Government of Israel                                                    New Tender for the Red
                          2010 Financial                                                          Line of the LRT and
                          Statements Released                                                     Metro in Tel Aviv
                     by the Accountant General in                                                 Includes monitoring the
                     the Ministry of Finance.                                                     execution of engineering.
   Press Release with Main Data                                                Read More



                                 IMF, OECD Raise Forecasts for the Israeli Economy

           The International Monetary Fund increased its growth prediction for the
           Israeli economy to 3.8% in 2011 and 2012.

           Also, The OECD predicts that Israel will achieve 5.4% GDP growth in
           2011 and 4.7% in 2012.
                                                                                          th
The Israeli economy grew 4.7% in 2010, with a 7.6% growth in the 4 quarter of 2010. The Bank of Israel has
forecast the Israeli economy to grow 4.5% in 2011 and 4.0% in 2012.


(Source: Ministry of Finance, Ministry of Industry, Trade and Labor, IMF, OECD, Globes)




                Ministry of Finance Launches NIS 2.75 Billion Aid Plan for Exporters
Minister of Finance, Dr. Yuval Steinitz, has asked the Knesset Finance
Committee to approve a framework of guarantees for exporters in order to
launch a new plan and expand the scope of activity of Ashra Ltd.

The goal of the plan is to expand Israel’s export activity out of recognition of the
importance of exports as a growth engine for the economy. The NIS 2.75 billion plan
will expand the financing solutions available to exporters and will also increase the
basket of services offered by Ashra, the government insurance company.

The plan includes two steps for expanding the medium and long-term credit offered to Israeli exporters:
   1. State guarantee for export deals in the medium range – the Top up 2 Plan.
   2. Expanding the scope of activity of Ashra Ltd.
     Read More
 (Source: Ministry of Finance)




                                     Privatization of the Eilat Port is Underway
The Government Companies Authority Issued a Public Announcement for the Sale of
the State's Holdings in the Eilat Port Company. The port of Eilat handles
approximately 6% of Israel's maritime trade, and employs around 130 workers.
Minister of Finance, Dr. Yuval Steinitz, said: "The privatization of the Eilat port will
increase exports and imports through Israel's southern gateway and strengthen the
city of Eilat."
    Read More
(Source: Ministry of Finance)


                                                                   -2-
             1 Kaplan St. Jerusalem 91030,                  P.O. Box 3100,           Tel: 02-5317200,   Fax: 02-5695349
             English: www.financeisrael.mof.gov.il                                               Hebrew: www.mof.gov.il
Permission for 'Noa North' and 'Or' Gas fields Development Granted
                                  In June, the Ministry of National Infrastructures has given permission to Nobel
                                  Energy to begin developing the 'Noa North' natural gas field, located near the town
                                  of Ashkelon and the Gaza Strip coast. The ministry has instructed the company to
                                  submit its drilling and development plans before the middle of July.
                         The Ministry of National Infrastructures also ordered Israel Oil Co. to develop the
                         'Or' gas structure, which is part of the Med Yavne license. Med Yavne is adjacent to
the Noa and Yam Tethys fields off the coast of southern Israel. The company was instructed to present a drilling
and development plan by August 1.
(Source: Ministry of National Infrastructures, Globes, Ynet)




                           Robust and Determined: News from Israel's R&D Sector
                                       Israel is well known for its robust R&D sector, and in 2011, Israel kept its
                                                    st
                                       position as 1 in the world for total expenditures on R&D as a % of GDP (IMD
                                       WCY 2011). Also, Israel holds the EUREKA (the pan-European network for
                                       market-oriented, industrial R&D) chairmanship for 2011.

                                       Following are several news items from Israel's R&D Sector in the last 3 months:
         Israel to be 1st non-Euro member of elite                          Shimon Peres to raise funds for Israeli brain
    research club                                                       research
    The cabinet is expected approve the $15 m. annual                   The President will set up an NPO for brain research
    entrance fee that will allow it to become part of the               led by Dr. Rafi Gidron.
    European Organization for Nuclear Research.
                                                                            AMD to establish Israel R&D center in Tel
        Israel signs R&D cooperation agreement with                     Aviv
    Shanghai                                                            The R&D center is based on 3D graphics developer
    The Shanghai Municipality has marked several                        Graphic Remedy, acquired a few months ago.
    industries that it wants to promote through increased
    R&D activity in the coming years.                                      World Leader EMC to Open R&D Center in
                                                                        Beer Sheva
        Israel, Taiwan extend scientific collaboration                  The R&D center is based on 3D graphics developer
    Israel and Taiwan will likely expand academic                       Graphic Remedy, acquired a few months ago.
    exchanges in the fields of marine science and
    robotics following the signing of a science                             EURAXESS Israel launches portal for mobile
    cooperation deal.                                                   researchers
                                                                        The portal contains all necessary information for a
         Marvell to invest $200m in Israel R&D center                   researcher moving to Israel.
    Marvell CEO Dr. Sehat Sutardja and VP Weili Dai
    will officially announce the investment at a meeting                    General Electric to set up new Israeli R&D
    with President Peres.                                               center in Haifa
                                                                        The R&D center will do basic research in medical
                                                                        devices, clean energy, and water technologies.
    Read More:
         Israel Ranked 17th in IMD World Competitiveness Yearbook 2011
         Eureka – Israel Chairmanship Website
    (Source: Ministry of Finance, Ministry of Industry, Trade and Labor, Ministry of Foreign Affairs, Eureka, Jerusalem Post, Globes,
    Focus Taiwan)




                                                                      -3-
             1 Kaplan St. Jerusalem 91030,                     P.O. Box 3100,     Tel: 02-5317200,       Fax: 02-5695349
             English: www.financeisrael.mof.gov.il                                              Hebrew: www.mof.gov.il
Monetary News and Capital Market
                          Barclays Commends Israel's Attractive Market Valuation
Barclay's chose the Israeli Currency (Shekel) as their foreign exchange pick for the EMEA (Europe, Middle
East and Africa).
According to a Barclay's report on emerging markets from June: "despite a 13% sell-off from the January highs,
Israel benefits from strong economic growth and low volatility, and the shekel is our foreign exchange pick in EMEA,
which augers well for equity markets."
(Source: Barclay's, Globes)




                                 Moody's, Fitch Left Israel's Ratings Unchanged
     Further Significant Support for the Israeli Government's Economic Policy: Moody's Credit Rating
     Agency Left Israel's A1-Stable Rating Unchanged, Fitch Ratings Left Israel's A Stable Rating
     Unchanged.
     Moody's representatives noted in their report that the A1 rating balances Israel's
     economic and financial strength with the geopolitical challenges it faces. Vice
     President in Moody's Sovereign Risk Group, Mr. Anthony Thomas, said in the
     report that the Israeli economy is strong and dynamic and notes favorably the
     coherent macroeconomic policy implemented by the Israeli government.
     Fitch noted in their announcement that "the affirmation reflects the resumption of the downward trend in
     public deficits and debt, the robust outlook for Israeli growth, and a strengthening in the sovereign's
     external balance sheet." Ms. Purvi Harlalka, director of Fitch's Middle East and Africa Sovereign Ratings
     Group, said that "these positive trends mitigate concerns surrounding an overheating housing market and
     a more difficult geopolitical environment.




     Read More:
       Moody's International Credit Rating Agency Releases Its Annual Credit Report on Israel, Leaving the
     Country's A1-Stable Rating Unchanged
       Fitch Ratings Supports Israel's Economic Policy, Leaving the Country's A Stable Rating Unchanged
     (Source: Ministry of Finance, Moody's, Fitch Ratings)




                                                                    -4-
             1 Kaplan St. Jerusalem 91030,                   P.O. Box 3100,   Tel: 02-5317200,   Fax: 02-5695349
             English: www.financeisrael.mof.gov.il                                        Hebrew: www.mof.gov.il
From the Press

                 Israel Ranked 17th in IMD World Competitiveness Yearbook 2011
                     Israel keeps its position as 17th in the overall ratings, as it was ranked 17th also in 2010 .

                     The International Institute for Management and Development (IMD) is a world-leading business
                     school. IMD publishes the World Competitiveness Yearbook, which ranks and analyzes how a
                     nation’s environment creates and sustains the competitiveness of enterprises.

                     In IMD's World Competitiveness Yearbook (WCY) in 2011, Israel is 1st in the world in total
                     expenditures of R&D as % of GDP, entrepreneurship, central bank policy and scientific
                     research. Also, In IMD WCY 2011 Israel is 2nd in the world in access to venture capital and
                     public expenditure on education. Israel's weak ratings were in immigration laws, governmental
                     debt as a % of GDP, long term unemployment and cost of living.

                               Read More

(Source: IMD, Ministry of Finance, Federation of Israeli Chambers of Commerce)




                               Gallup Survey Finds Israel 7th Most Thriving Country
According to a survey conducted by Gallup Institute, 63% of respondents in Israel
                                                          th
said they were happy with their lives, ranking Israel as 7 out of 124 countries.
Gallup classifies respondents' well-being as "thriving," "struggling," or "suffering,"
according to how they rated their current and future lives on a ladder scale with steps
                                                                                      th
numbered from 0 to 10. In 2010, Israel was ranked by Gallup and Forbes as the 8
                                                                  nd
happiest place in the world to live in. Also, Israel was ranked 22 in a 2010 Newsweek
survey of "true national champions."
Read More:
    Gallup Global Wellbeing Survey findings
                     th
    Israel ranked 8 by Forbes and Gallup in 2010
                          nd
    Israel ranked 22           by Newsweek in 2010
(Source: Gallup, Ynetnews, Jerusalem Post, Forbes, Newsweek)




                   Israeli Venture Capital                                       HSBC: Israeli Economy is Robust
                   Reaches Pre-Crisis Level
                                                                          HSBC analyst Jonathan Katz described the
                  According to PwC Israel Money-                          state of the Israeli economy as "robust."
Tree Report, Israeli VC backed companies raised
$342 million in Q1 2011, double the amount                                Katz also wrote that "the fiscal budget
raised in the corresponding quarter of 2010, and                          performance in the first three months of the year
34% more than in Q4 2010. This was the largest                            has been a pleasant surprise, reflecting a budget
amount raised since the collapse of Lehman                                surplus of NIS 2 billion as compared to a budget
Brothers in Sep. 2008.                                                    deficit of NIS 3.6 billion in Q1 2010."

Also, IVC and KPMG Report finds that Israeli                              Katz projected that the fiscal target of 3% of GDP
high-tech capital raising in Q1/2011 rose by 39%                          will be met in 2011, and that governmental debt
from Q4 2010, as Life sciences sector continues                           will decline from 75% of GDP in 2010, to 73% in
to lead capital raising.                                                  2011 (HSBC estimate), and possibly lower.
                                                                          (Source: Globes)
(Source: Globes, PwC, IVC Research Center)



                                                                -5-
           1 Kaplan St. Jerusalem 91030,                 P.O. Box 3100,           Tel: 02-5317200,   Fax: 02-5695349
           English: www.financeisrael.mof.gov.il                                              Hebrew: www.mof.gov.il
Environmental Economy News

               One of the Biggest Desalination Plants of its Kind to be built in Sorek
                                On Completion of the Plant, the Desalinated Water Will Constitute over 65% of
                                Israel’s Domestic Water Consumption.
                                The financing agreement for the construction and operation of the seawater
                                                                                rd
                                desalination plant in Sorek was signed on May 23 . The plant, with an output of 150
                                million cubic meters per year and a cost of approximately USD 400 million, is
                                expected to be the second largest in the world.
Photo: SDL
SDL was chosen by the Finance Ministry’s Inter-Ministerial Tenders Committee for Seawater Desalination as
the winner of the tender for financing, planning, building and operating the plant in Sorek. The plant, whose
                                                    th
construction will be completed in 2013, is the 4 BOT (Build-Own-Transfer) project to be built in cooperation
with the private sector. It will operate using reverse osmosis technology.
The plant constitutes a global achievement in light of its record output and the low price of the desalinated
water, just NIS 2.01 per cubic meter, representing a significant saving for Israel’s water sector.
     Read More
(Source: Ministry of Finance, Ynetnews, SDL)




                      Green Desalination Process Put to the Test by IDE in China
Israeli desalination company IDE Technologies has introduced a greener way to pull
salt from water. Putting it to the test in China, the Israeli company has created a win-
win solution for the environmentally conscious Chinese: using runoff steam from a
power plant to help run the desalination plant. The result is water for the power plant,
drinking water for the community and salt to sell.
IDE also built the IDE MED desalination plant in Tianjin, China. According to the CEO of IDE, Mr. Avshalom
Felber, The Israeli-built IDE MED is the country’s largest and greenest one yet. Using a process called multi-
effect distillation (MED), the plant is claimed to be 50 percent more energy efficient than any other thermal
desalination plant today.
    Read More
(Source: Israel NEWTech, Israel Trade Commission in Sydney, Australia)




  Arava Power Inaugurates Israel's 1st                                   15th Annual Clean Tech Expo to be Held
       Solar Field in the Negev                                                      in Israel in July
                                        st                                        th
                           The 1 Israeli solar                           The 15 annual Clean
                           field is spread over 80                       Tech Expo in July will
                           dunam       in     Kibbutz                    highlight the Israeli
                           Ketura, and consists of                       solutions for energy &
                           18,500       photovoltaic                     water needs of Brazil,
                           panels,       that     are                    Russia, India & China.
                           expected to produce                           Read More:
about 9 million kilowatts per year. The Israel
Electric Corporation will pay Arava Power NIS 1.5                            CleanTech 2011 Expo website
per kilowatt hour.                                                           Article in Ministry of Foreign Affiars website
(Source: Globes, ISRAEL21C)                                              (Source: Ministry of Foreign Affairs)




                                                                 -6-
             1 Kaplan St. Jerusalem 91030,                P.O. Box 3100,         Tel: 02-5317200,        Fax: 02-5695349
             English: www.financeisrael.mof.gov.il                                              Hebrew: www.mof.gov.il
Economic Figures

                                                              Economic Data
                                           Data is calculated at an annual Year-on-Year rate of change
                                            Data from previous editions is constantly being updated

                  See more extended economic data in our Economic Highlights PowerPoint Presentation

                                                          2009                      2010                Q4 2010               Q1 2011

 GDP Growth                                               0.8%                      4.7%                  7.6%                  4.7%

 Business GDP Growth                                      0.2%                      5.4%                  8.7%                  5.8%

 Private Consumption Growth                               1.4%                      1.4%                  8.8%                  6.8%

 Public Consumption Growth                                2.2%                      2.2%                  4.7%                  -5.7%

                                      GDP Per Capita, Based On PPP For 2009: 29,531$


                                                       Consumer Price Index
                                                                   In 2008 prices


  May             Jun          Jul        Aug         Sep          Oct        Nov         Dec         Jan        Feb        Mar        Apr
  2010            2010        2010        2010        2010        2010        2010        2010        2011       2011       2011       2011

      99.5        99.8        100.3       100.8       101.0       101.3       101.4       101.8       102.0      102.3      102.5      103.1


104
103
102
101
100
99
98
97
         5.2010      6.2010      7.2010      8.2010      9.2010     10.2010     11.2010     12.2010     1.2011     2.2011     3.2011    4.2011




                                                               Foreign Trade
                                                              Goods and Services

                                                          2009                      2010                Q4 2010               Q1 2011

 Import Growth                                          -14.1%                   12.6%                   15.6%                  15.9%

 Export Growth                                          -12.5%                   13.6%                   11.3%                  16.0%


 (Source: Ministry of Finance, Central Bureau of Statistics, IMF)




                                                                      -7-
             1 Kaplan St. Jerusalem 91030,                     P.O. Box 3100,              Tel: 02-5317200,       Fax: 02-5695349
             English: www.financeisrael.mof.gov.il                                                      Hebrew: www.mof.gov.il
Balances
                                                 2010                  Q4 2010                       Q1 2011
Current account Surplus                          2.9%                    1.0%                         0.6%
As % of GDP
Budget Deficit                                   3.7%                     --                            --
Central government
Gross Debt (% of GDP)                            76.4%                    --                            --
General government gross financial liabilities


                                                  Investments
                                                            2010          Q3 2010           Q4 2010          Q1 2011

Gross Domestic Capital Formation                            1.9%            2.1%            20.0%            33.3%

Gross Investments in Fixed Assets                          12.6%           20.8%            19.7%            23.7%

Gross Israeli Investments Abroad (Billion$)                27.7$B          3.9$B            10.1$B            7.0$B

Gross Foreign Investments in Israel (Billion$)             17.6$B          3.7$B             6.9$B            5.1$B

Gross Foreign Direct Investments (Billion$)                 5.2$B          1.7$B             2.4$B            2.6$B


See more extended economic data in our Economic Highlights PowerPoint Presentation


(Source: Ministry of Finance)




                              We Welcome Your Feedback
                                                                                             Roni Hershkovitz
         Follow us on Twitter                                                                Director
                                                                                             Overseas Economic Information
         Follow us on Linkedin                                                               International Affairs Department
                                                                                             Ministry of Finance
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                                                         -8-
         1 Kaplan St. Jerusalem 91030,            P.O. Box 3100,        Tel: 02-5317200,      Fax: 02-5695349
         English: www.financeisrael.mof.gov.il                                       Hebrew: www.mof.gov.il

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Economic Highlights Newsletter, Q2 2011

  • 1. STATE OF ISRAEL MINISTRY OF FINANCE International Affairs Department July 2011 Economic Highlights 2nd Quarter 2011 Website: www.financeisrael.mof.gov.il Follow us on Twitter Email: financeIsrael@mof.gov.il Follow us on Linkedin Table of Contents Headlines ......................................................................................................................... 1 Latest News ..................................................................................................................... 2 Monetary News and Capital Market ............................................................................... 4 From the Press ................................................................................................................ 5 Environmental Economy News ...................................................................................... 6 Economic Figures ........................................................................................................... 7 We Welcome Your Feedback.......................................................................................... 8 Headlines Raised Growth Forecasts for the Israeli Economy Page 2 Robust and Determined: News from Israel's R&D Sector Page 3 Moody's, Fitch Left Israel's Ratings Unchanged Page 4 Israel Ranked 17th in IMD World Competitiveness Yearbook 2011 Page 5 Gallup Survey Finds Israel 7th Most Thriving Country Page 5 New and Bigger Desalination Plant to be built in Sorek Page 6 -1- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 2. Latest News Government of Israel New Tender for the Red 2010 Financial Line of the LRT and Statements Released Metro in Tel Aviv by the Accountant General in Includes monitoring the the Ministry of Finance. execution of engineering. Press Release with Main Data Read More IMF, OECD Raise Forecasts for the Israeli Economy The International Monetary Fund increased its growth prediction for the Israeli economy to 3.8% in 2011 and 2012. Also, The OECD predicts that Israel will achieve 5.4% GDP growth in 2011 and 4.7% in 2012. th The Israeli economy grew 4.7% in 2010, with a 7.6% growth in the 4 quarter of 2010. The Bank of Israel has forecast the Israeli economy to grow 4.5% in 2011 and 4.0% in 2012. (Source: Ministry of Finance, Ministry of Industry, Trade and Labor, IMF, OECD, Globes) Ministry of Finance Launches NIS 2.75 Billion Aid Plan for Exporters Minister of Finance, Dr. Yuval Steinitz, has asked the Knesset Finance Committee to approve a framework of guarantees for exporters in order to launch a new plan and expand the scope of activity of Ashra Ltd. The goal of the plan is to expand Israel’s export activity out of recognition of the importance of exports as a growth engine for the economy. The NIS 2.75 billion plan will expand the financing solutions available to exporters and will also increase the basket of services offered by Ashra, the government insurance company. The plan includes two steps for expanding the medium and long-term credit offered to Israeli exporters: 1. State guarantee for export deals in the medium range – the Top up 2 Plan. 2. Expanding the scope of activity of Ashra Ltd. Read More (Source: Ministry of Finance) Privatization of the Eilat Port is Underway The Government Companies Authority Issued a Public Announcement for the Sale of the State's Holdings in the Eilat Port Company. The port of Eilat handles approximately 6% of Israel's maritime trade, and employs around 130 workers. Minister of Finance, Dr. Yuval Steinitz, said: "The privatization of the Eilat port will increase exports and imports through Israel's southern gateway and strengthen the city of Eilat." Read More (Source: Ministry of Finance) -2- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 3. Permission for 'Noa North' and 'Or' Gas fields Development Granted In June, the Ministry of National Infrastructures has given permission to Nobel Energy to begin developing the 'Noa North' natural gas field, located near the town of Ashkelon and the Gaza Strip coast. The ministry has instructed the company to submit its drilling and development plans before the middle of July. The Ministry of National Infrastructures also ordered Israel Oil Co. to develop the 'Or' gas structure, which is part of the Med Yavne license. Med Yavne is adjacent to the Noa and Yam Tethys fields off the coast of southern Israel. The company was instructed to present a drilling and development plan by August 1. (Source: Ministry of National Infrastructures, Globes, Ynet) Robust and Determined: News from Israel's R&D Sector Israel is well known for its robust R&D sector, and in 2011, Israel kept its st position as 1 in the world for total expenditures on R&D as a % of GDP (IMD WCY 2011). Also, Israel holds the EUREKA (the pan-European network for market-oriented, industrial R&D) chairmanship for 2011. Following are several news items from Israel's R&D Sector in the last 3 months: Israel to be 1st non-Euro member of elite Shimon Peres to raise funds for Israeli brain research club research The cabinet is expected approve the $15 m. annual The President will set up an NPO for brain research entrance fee that will allow it to become part of the led by Dr. Rafi Gidron. European Organization for Nuclear Research. AMD to establish Israel R&D center in Tel Israel signs R&D cooperation agreement with Aviv Shanghai The R&D center is based on 3D graphics developer The Shanghai Municipality has marked several Graphic Remedy, acquired a few months ago. industries that it wants to promote through increased R&D activity in the coming years. World Leader EMC to Open R&D Center in Beer Sheva Israel, Taiwan extend scientific collaboration The R&D center is based on 3D graphics developer Israel and Taiwan will likely expand academic Graphic Remedy, acquired a few months ago. exchanges in the fields of marine science and robotics following the signing of a science EURAXESS Israel launches portal for mobile cooperation deal. researchers The portal contains all necessary information for a Marvell to invest $200m in Israel R&D center researcher moving to Israel. Marvell CEO Dr. Sehat Sutardja and VP Weili Dai will officially announce the investment at a meeting General Electric to set up new Israeli R&D with President Peres. center in Haifa The R&D center will do basic research in medical devices, clean energy, and water technologies. Read More: Israel Ranked 17th in IMD World Competitiveness Yearbook 2011 Eureka – Israel Chairmanship Website (Source: Ministry of Finance, Ministry of Industry, Trade and Labor, Ministry of Foreign Affairs, Eureka, Jerusalem Post, Globes, Focus Taiwan) -3- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 4. Monetary News and Capital Market Barclays Commends Israel's Attractive Market Valuation Barclay's chose the Israeli Currency (Shekel) as their foreign exchange pick for the EMEA (Europe, Middle East and Africa). According to a Barclay's report on emerging markets from June: "despite a 13% sell-off from the January highs, Israel benefits from strong economic growth and low volatility, and the shekel is our foreign exchange pick in EMEA, which augers well for equity markets." (Source: Barclay's, Globes) Moody's, Fitch Left Israel's Ratings Unchanged Further Significant Support for the Israeli Government's Economic Policy: Moody's Credit Rating Agency Left Israel's A1-Stable Rating Unchanged, Fitch Ratings Left Israel's A Stable Rating Unchanged. Moody's representatives noted in their report that the A1 rating balances Israel's economic and financial strength with the geopolitical challenges it faces. Vice President in Moody's Sovereign Risk Group, Mr. Anthony Thomas, said in the report that the Israeli economy is strong and dynamic and notes favorably the coherent macroeconomic policy implemented by the Israeli government. Fitch noted in their announcement that "the affirmation reflects the resumption of the downward trend in public deficits and debt, the robust outlook for Israeli growth, and a strengthening in the sovereign's external balance sheet." Ms. Purvi Harlalka, director of Fitch's Middle East and Africa Sovereign Ratings Group, said that "these positive trends mitigate concerns surrounding an overheating housing market and a more difficult geopolitical environment. Read More: Moody's International Credit Rating Agency Releases Its Annual Credit Report on Israel, Leaving the Country's A1-Stable Rating Unchanged Fitch Ratings Supports Israel's Economic Policy, Leaving the Country's A Stable Rating Unchanged (Source: Ministry of Finance, Moody's, Fitch Ratings) -4- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 5. From the Press Israel Ranked 17th in IMD World Competitiveness Yearbook 2011 Israel keeps its position as 17th in the overall ratings, as it was ranked 17th also in 2010 . The International Institute for Management and Development (IMD) is a world-leading business school. IMD publishes the World Competitiveness Yearbook, which ranks and analyzes how a nation’s environment creates and sustains the competitiveness of enterprises. In IMD's World Competitiveness Yearbook (WCY) in 2011, Israel is 1st in the world in total expenditures of R&D as % of GDP, entrepreneurship, central bank policy and scientific research. Also, In IMD WCY 2011 Israel is 2nd in the world in access to venture capital and public expenditure on education. Israel's weak ratings were in immigration laws, governmental debt as a % of GDP, long term unemployment and cost of living. Read More (Source: IMD, Ministry of Finance, Federation of Israeli Chambers of Commerce) Gallup Survey Finds Israel 7th Most Thriving Country According to a survey conducted by Gallup Institute, 63% of respondents in Israel th said they were happy with their lives, ranking Israel as 7 out of 124 countries. Gallup classifies respondents' well-being as "thriving," "struggling," or "suffering," according to how they rated their current and future lives on a ladder scale with steps th numbered from 0 to 10. In 2010, Israel was ranked by Gallup and Forbes as the 8 nd happiest place in the world to live in. Also, Israel was ranked 22 in a 2010 Newsweek survey of "true national champions." Read More: Gallup Global Wellbeing Survey findings th Israel ranked 8 by Forbes and Gallup in 2010 nd Israel ranked 22 by Newsweek in 2010 (Source: Gallup, Ynetnews, Jerusalem Post, Forbes, Newsweek) Israeli Venture Capital HSBC: Israeli Economy is Robust Reaches Pre-Crisis Level HSBC analyst Jonathan Katz described the According to PwC Israel Money- state of the Israeli economy as "robust." Tree Report, Israeli VC backed companies raised $342 million in Q1 2011, double the amount Katz also wrote that "the fiscal budget raised in the corresponding quarter of 2010, and performance in the first three months of the year 34% more than in Q4 2010. This was the largest has been a pleasant surprise, reflecting a budget amount raised since the collapse of Lehman surplus of NIS 2 billion as compared to a budget Brothers in Sep. 2008. deficit of NIS 3.6 billion in Q1 2010." Also, IVC and KPMG Report finds that Israeli Katz projected that the fiscal target of 3% of GDP high-tech capital raising in Q1/2011 rose by 39% will be met in 2011, and that governmental debt from Q4 2010, as Life sciences sector continues will decline from 75% of GDP in 2010, to 73% in to lead capital raising. 2011 (HSBC estimate), and possibly lower. (Source: Globes) (Source: Globes, PwC, IVC Research Center) -5- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 6. Environmental Economy News One of the Biggest Desalination Plants of its Kind to be built in Sorek On Completion of the Plant, the Desalinated Water Will Constitute over 65% of Israel’s Domestic Water Consumption. The financing agreement for the construction and operation of the seawater rd desalination plant in Sorek was signed on May 23 . The plant, with an output of 150 million cubic meters per year and a cost of approximately USD 400 million, is expected to be the second largest in the world. Photo: SDL SDL was chosen by the Finance Ministry’s Inter-Ministerial Tenders Committee for Seawater Desalination as the winner of the tender for financing, planning, building and operating the plant in Sorek. The plant, whose th construction will be completed in 2013, is the 4 BOT (Build-Own-Transfer) project to be built in cooperation with the private sector. It will operate using reverse osmosis technology. The plant constitutes a global achievement in light of its record output and the low price of the desalinated water, just NIS 2.01 per cubic meter, representing a significant saving for Israel’s water sector. Read More (Source: Ministry of Finance, Ynetnews, SDL) Green Desalination Process Put to the Test by IDE in China Israeli desalination company IDE Technologies has introduced a greener way to pull salt from water. Putting it to the test in China, the Israeli company has created a win- win solution for the environmentally conscious Chinese: using runoff steam from a power plant to help run the desalination plant. The result is water for the power plant, drinking water for the community and salt to sell. IDE also built the IDE MED desalination plant in Tianjin, China. According to the CEO of IDE, Mr. Avshalom Felber, The Israeli-built IDE MED is the country’s largest and greenest one yet. Using a process called multi- effect distillation (MED), the plant is claimed to be 50 percent more energy efficient than any other thermal desalination plant today. Read More (Source: Israel NEWTech, Israel Trade Commission in Sydney, Australia) Arava Power Inaugurates Israel's 1st 15th Annual Clean Tech Expo to be Held Solar Field in the Negev in Israel in July st th The 1 Israeli solar The 15 annual Clean field is spread over 80 Tech Expo in July will dunam in Kibbutz highlight the Israeli Ketura, and consists of solutions for energy & 18,500 photovoltaic water needs of Brazil, panels, that are Russia, India & China. expected to produce Read More: about 9 million kilowatts per year. The Israel Electric Corporation will pay Arava Power NIS 1.5 CleanTech 2011 Expo website per kilowatt hour. Article in Ministry of Foreign Affiars website (Source: Globes, ISRAEL21C) (Source: Ministry of Foreign Affairs) -6- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 7. Economic Figures Economic Data Data is calculated at an annual Year-on-Year rate of change Data from previous editions is constantly being updated See more extended economic data in our Economic Highlights PowerPoint Presentation 2009 2010 Q4 2010 Q1 2011 GDP Growth 0.8% 4.7% 7.6% 4.7% Business GDP Growth 0.2% 5.4% 8.7% 5.8% Private Consumption Growth 1.4% 1.4% 8.8% 6.8% Public Consumption Growth 2.2% 2.2% 4.7% -5.7% GDP Per Capita, Based On PPP For 2009: 29,531$ Consumer Price Index In 2008 prices May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 99.5 99.8 100.3 100.8 101.0 101.3 101.4 101.8 102.0 102.3 102.5 103.1 104 103 102 101 100 99 98 97 5.2010 6.2010 7.2010 8.2010 9.2010 10.2010 11.2010 12.2010 1.2011 2.2011 3.2011 4.2011 Foreign Trade Goods and Services 2009 2010 Q4 2010 Q1 2011 Import Growth -14.1% 12.6% 15.6% 15.9% Export Growth -12.5% 13.6% 11.3% 16.0% (Source: Ministry of Finance, Central Bureau of Statistics, IMF) -7- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il
  • 8. Balances 2010 Q4 2010 Q1 2011 Current account Surplus 2.9% 1.0% 0.6% As % of GDP Budget Deficit 3.7% -- -- Central government Gross Debt (% of GDP) 76.4% -- -- General government gross financial liabilities Investments 2010 Q3 2010 Q4 2010 Q1 2011 Gross Domestic Capital Formation 1.9% 2.1% 20.0% 33.3% Gross Investments in Fixed Assets 12.6% 20.8% 19.7% 23.7% Gross Israeli Investments Abroad (Billion$) 27.7$B 3.9$B 10.1$B 7.0$B Gross Foreign Investments in Israel (Billion$) 17.6$B 3.7$B 6.9$B 5.1$B Gross Foreign Direct Investments (Billion$) 5.2$B 1.7$B 2.4$B 2.6$B See more extended economic data in our Economic Highlights PowerPoint Presentation (Source: Ministry of Finance) We Welcome Your Feedback Roni Hershkovitz Follow us on Twitter Director Overseas Economic Information Follow us on Linkedin International Affairs Department Ministry of Finance Subscribe our RSS Feeds Jerusalem Israel Subscribe our Newsletters Assaf Luxembourg Lauren Abecassis-Kandravy Write us an Email Overseas Economic Information Overseas Economic Information International Affairs Department International Affairs Department Ministry of Finance Ministry of Finance Visit our Website Jerusalem Jerusalem Israel Israel -8- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il