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Israel’s Economic Highlights Presentation, Q1 2012

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Israel’s Economic Highlights Presentation, Q1 2012

Israel’s Economic Highlights Presentation, Q1 2012

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  • 1. STATE OF ISRAEL MINISTRY OF FINANCE International Affairs DepartmentEconomic Highlights Presentation 1st Quarter 2012 In any case of information derived from sources external to the Ministry of Finance, such sources are mentioned at the bottom of each item
  • 2. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 2
  • 3. Main Economic IndicatorsEconomic FiguresGDP and Business GDPMajor GDP ComponentsExports of Goods and ServicesMain Trading PartnersGross Domestic Capital FormationForeign InvestmentsUnemployment and ParticipationConsumer Price IndexInflation RateIsrael’s Credit Ratings 3
  • 4. Economic Figures Criteria 2010 2011 2011 Q1 2011 Q2 2011 Q3 2011 Q4GDP 204.6 214.2 52.9 53.4 53.9 54.3(constant prices, 2005, in $B)*Real GDP growth rate 4.8% 4.7% 4.7% 3.7% 3.4% 3.2%(% change)GDP per capita, based on PPP $29,602 $31,005** -- -- -- --(Current international $)GDP per capita growth rate 2.9% 2.8% 2.9% 2.0% 1.5% 1.2%(%, 2005 prices)Exports (goods & services), $B* 87.7 91.9 23.0 23.6 23.0 22.6(As % of GDP) 42.9% 42.9% 43.5% 44.2% 42.7% 41.6%Imports (goods & services), $B* 82.3 91.0 22.5 23.3 22.8 22.5(As % of GDP) 40.2% 42.5% 42.5% 43.6% 42.3% 41.4%Unemployment rate 6.6% 5.7% 6.0% 5.6% 5.6% 5.4%* Using a public exchange rate of 1USD=3.6NIS (2011 average)** Estimated 4Additional Sources: IMF
  • 5. Economic Figures Criteria 2006 2007 2008 2009 2010 2011Public debt 84.3% 77.8% 77.1% 79.3% 76.3% 74.7%(As % of GDP)General government expenditure 44.7% 43.6% 43.0% 43.0% 42.6% 42.3%(As % of GDP)Current account surplus 5.1% 2.9% 0.9% 3.6% 2.9% 0.1%(As % of GDP)Inflation rate 2.1% 0.5% 4.6% 3.3% 2.7% 3.5%(CPI, yearly average, % change)Budget deficit 0.9% 0.0% 2.2% 5.2% 3.7% 0.0%(As % of GDP) 5
  • 6. GDP and Business GDP Annual rate of change, constant prices, 200511%9% 6.8% 6.8%7% 6.1% 6.1% 5.6% 5.8% 5.7% 5.5% 5.2% 4.8% 4.9% 4.8%5% 4.5% 4.7% 4.7% 4.4% 4.0% 3.7% 3.5% 3.4% 3.2% 3.0%3% 2.3% 1.5% 0.8%1% 0.4%-1% -1.0% -0.6%-3% GDP Business GDP 6
  • 7. Major GDP Components Annual rate of change, constant prices, 200520% Global economic crisis 16.3%15% 14.5% 13.7% 13.6%10% 9.2% 6.3% 6.6% 4.4% 4.8% 5% 3.3% 2.8% 2.1% 2.2% 2.2% 2.2% 1.4% 1.4% 1.4% 0%-5% Private Consumption -5.8% Public Consumption-10% Investment in Fixed Assets Exports of Goods and Services -12.5%-15% 7
  • 8. Exports of Goods and Services US $ Billions, constant prices, 2005100.0 Global economic crisis 90.0 80.0 26.9 70.0 24.1 24.2 60.0 21.1 22.0 19.3 50.0 17.4 16.0 40.0 30.0 62.9 57.7 56.1 50.3 43.3 46.3 20.0 36.7 39.8 10.0 0.0 Services Goods* Using a public exchange rate of 1USD=3.6NIS (2011 average) 8
  • 9. Main Trading Partners US $ Billions, 2010 8 Imports 7 6.720 6.1 18.5 Exports 618 516 3.7 4 3.214 3 2.4 2.2 2.112 1.8 1.8 1.8 210 18 0 6.064 3.1 2.9 2.3 1.8 1.7 1.3 1.3 1.320* Since July 1997 the data on trade with Hong-Kong is added to the data on China 9Additional Sources: Central Bureau of Statistics
  • 10. Main Trading Partners US $ Billions35.0 Imports 33.030.0 29.7 26.8 26.525.0 22.920.015.0 16.0 13.2 13.1 11.710.0 9.8 9.3 8.3 8.7 6.3 7.3 35.0 Exports 5.0 30.0 0.0 2007 2008 2009 2010 2011 25.0 19.9 21.9 21.4 20.0 17.6 19.6 21.2 18.9 19.2 19.0 15.0 15.3 15.4 12.9 12.0 10.0 9.6 9.3 Europe 5.0 Asia 0.0 North America 2007 2008 2009 2010 2011 10 Additional Sources: Central Bureau of Statistics
  • 11. Gross Domestic Capital Formation As % of GDP22% 21.2%21% 20.3%20% 19.6% 19.3%19% 18.9% 18.0% 18.1% 17.9%18% 17.6%17%16%15% 11
  • 12. Foreign Investments US $ Billions25.020.0 19.4 17.6 15.315.0 14.4 11.4 10.8 10.9 10.710.0 9.5 8.8 8.3 7.8 5.2 5.0 4.3 4.3 4.4 3.3 2.4 0.0 Total Investments Direct Investments* 2006 is exceptional due to a large acquisition by Teva Pharmaceutical Industries Ltd. 12
  • 13. Unemployment and Participation As % of total labor force9% 59% Since the 2nd quarter of 2009 unemployment is relatively decreasing, with a relative increase in participation rate in the beginning of 2010. In the 4th quarter of 2011 unemployment reached an historic low level of 5.4%.8% 58% 57.7% 57.7% 7.9% 57.5% 57.5% 57.4% 57.4% 7.6% 57.2% 7.5%7% 7.2% 57% 57.1% 6.9% 56.8% 56.8% 56.8% 56.7% 6.6% 6.6% 6.4%6% 56% 6.0% 5.6% 5.6% 5.4%5% 55% Unemployment Rate Participation in the Labor Force4% 54% 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 13
  • 14. Consumer Price Index Last 12 monthly averages, 2010=100105 104.2 104.1104 104.0 104.0 104.0 104.0 104.0 104.0 103.7 103.6104 103.1103103 102.5 102.3102102101 14Additional Sources: Central Bureau of Statistics
  • 15. Inflation RateRate of change in consumer price index, yearly average5% 4.6%5%4% 3.5%4% 3.3%3% 2.7%3% 2.1%2%2% 1.3%1% 0.5%1%0% 15
  • 16. Israel’s Credit Ratings Domestic Bonds Overseas Bonds Rating Firm Term Forecast Rating Rating Long A1 A1 Moodys Stable Short - P1 Long AA- A+Standard & Poors Stable Short A-1+ A-1 Long A+ A Fitch Stable Short - F1 16
  • 17. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 17
  • 18. BalancesGross Public DebtBudget DeficitGeneral Government ExpenditureCurrent Account SurplusNet Foreign SurplusGross Tax Burden 18
  • 19. Gross Public Debt As % of GDP100% 97.4%95% 93.8%90% Global economic crisis85% 84.3%80% 79.3% 77.8% 77.1% 76.3% 74.7%75%70% 19
  • 20. Budget DeficitAs % of GDP6% 5.2%5%4% 3.7% 3.5%3% 2.2%2% 1.8% 0.9%1% 0.0% 0.0%0% 20
  • 21. Budget Deficit Target 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. 0 -3,626 -3,657 -4,870 -6,721 -6,371-10,000 -16,161-20,000 -18,464 -25,173-30,000 -28,633 -30,165-40,000 -42,924-50,000 Quarterly Budget Execution Yealy Budget Execution Yearly Budget Target 21
  • 22. General Government Expenditure As % of GDP48% 47.3%47%46% 45.3%45% 44.7%44% 43.6% 43.0% 43.0%43% 42.6% 42.3%42%41%40%39% 22
  • 23. Current Account SurplusAs % of GDP6% 5.1%5%4% 3.6% 3.1% 2.9% 2.9%3% 2.3%2%1% 0.9% 0.1%0% 23
  • 24. Net Foreign Surplus As % of GDP30% 27.0% 25.6% 25.9%25% 21.9% 22.0%20%15% 14.3% 10.7%10%5% 4.4%0%* Using a public exchange rate of 1USD=3.6NIS (2011 average) 24
  • 25. Gross Tax Burden As % of GDP37% 36.2%36% 35.9% 35.5% 35.6%35% OECD countries average: 34.8% (2008 average)34% 33.8%33% 32.7% 32.4%32% 31.4%31%30% 25Additional Sources: OECD
  • 26. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 26
  • 27. International ComparisonsGDP GrowthInflation RatesIsrael on IMD RankingsIsrael on WEF RankingsInterest Rates: Israel & the U.S.Stock Indices: NASDAQ & Tel-Aviv 100 27
  • 28. GDP Growth Israel compared to advanced economies, annual rate of change, constant prices8% 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.6% 5.6% 5.5% 4.8% 4.9% 4.8% 4.7% 4.0%4% 3.1% 3.1% 3.1% 2.7% 2.8%2% 1.6% 0.8% 0.1%0%-2%-4% Israel Advanced Economies -3.7% 28Additional Sources: IMF
  • 29. Inflation Rates Rate of change in consumer price index, yearly average4% The Israeli economy demonstrated high stability compared to other countries throughout the global economic crisis. 3.3%3% 2.7% 2.4% 2.2%2% 1.6% 1.6%1.7% 1.6% 1.4% 1.2%1% 0.7% 0.2% 0.1%0% -0.3% -0.5%-1% -0.7% -0.9% -1.4% -1.6% 2009 (dark) 2010 (bright) -1.7%-2% 29Additional Sources: IMF
  • 30. Israel on IMD Rankings 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) 30Additional Sources: IMD World Competitiveness Yearbook 2011
  • 31. Israel on IMD Rankings IMD World Competitiveness Yearbook 2011 Information technology skills Central bank policy Flexible and adaptability Entrepreneurship 31Additional Sources: IMD World Competitiveness Yearbook 2011
  • 32. Israel on IMD Rankings IMD World Competitiveness Yearbook 2011 Total expenditure on R&D (as % of GDP) Scientific research Venture capital Innovative capacity 32Additional Sources: IMD World Competitiveness Yearbook 2011
  • 33. Israel on WEF Rankings World Economic Forum Global Competitiveness Index 2011-2012 The World Economic Forum ranked Israel 22nd out of 142 countries for 2011-2012 33Additional Sources: World Economic Forum Global Competitiveness Index 2011-2012
  • 34. Israel on WEF Rankings World Economic Forum Global Competitiveness Index 2011-2012 Quality of scientific research institutions Venture capital availability Utility patents per million population Strength of investor protection 34Additional Sources: World Economic Forum Global Competitiveness Index 2011-2012
  • 35. Israel on WEF Rankings World Economic Forum Global Competitiveness Index 2011-2012 Government procurement of advanced technology products Capacity for innovation Firm-level technology absorption University-industry collaboration in R&D 35Additional Sources: World Economic Forum Global Competitiveness Index 2011-2012
  • 36. Interest Rates: Israel & the U.S.3.5% 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%. 3.25%3.0% 3.00% 2.75%2.5% 2.50%2.0% 2.00% 2.00%1.5% 1.50% 1.50%1.0%0.5% Bank of Israel Federal Reserve =00.0% 36
  • 37. Stock Indices: NASDAQ & Tel-Aviv 1001,500 3,000 Tel Aviv 100 corresponds with the NASDAQ to current events, with relatively stable reactions.1,400 2,9001,300 2,8001,200 2,7001,100 2,6001,000 2,500 900 2,400 800 2,300 700 2,200 600 2,100 Tel Aviv 100 NASDAQ 500 2,000 37
  • 38. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 38
  • 39. Israel in the OECDIsrael was invited as a full member in the OECD on May 10th, 2010, and officially joined in Sep. 10, 2010.Expenditure on R&DReal GDP GrowthGDP per CapitaUnemployment 39
  • 40. Expenditure on R&D As % of GDP, 2010 or latest available year6% Israel is 1st in the OECD in expenditure on R&D (research & development) as % of GDP, demonstrating innovation, development and creativity.5% 4.25%4%3% 2.33%2%1%0% 40Additional Sources: OECD
  • 41. Real GDP Growth 3-year average, end of period11% Israel’s 3-year average growth rate is higher then most OECD members.10%9%8%7%6%5%4% 3.19%3%2%1% -0.10%0%-1%-2%-3%-4%-5%-6%-7% 41Additional Sources: OECD
  • 42. GDP per Capita U.S $, Current prices, PPP, 2010100,000 90,000 80,000 70,000 60,000 50,000 40,000 34,025 28,510 30,000 20,000 10,000 0 42Additional Sources: OECD
  • 43. Unemployment Rate 3-year average 2008-2010, or latest available period25% Israel’s unemployment rate is in an ongoing downtrend, reaching an historic low level of 5.5% in Q2 2011.20%15%10% 7.7% 7.1%5%0% 43Additional Sources: OECD
  • 44. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 44
  • 45. International AgreementsIsrael’s Free Trade AgreementsAvoidance of Double TaxationCooperation in Industrial R&DBilateral Investment TreatiesEconomic Organizations 45
  • 46. Israel’s Free Trade Agreements 1985 USA QIZ Agreements 1992 EFTA 2004 Egypt 1997 Turkey 1998 Jordan 1997 Canada 1999 Mexico 2000 European Union (Association Agreement) 2007 MERCOSURMore extended information is available in the Israel Ministry of Finance website 46
  • 47. Avoidance of Double Taxation Austria Denmark India Belarus Estonia Ireland Belgium Ethiopia Italy Brazil Finland Jamaica Bulgaria France Japan Canada Georgia Korea China Germany Latvia Croatia Greece Lithuania Czech Republic Hungary LuxembourgMore extended information is available in the Israel Ministry of Finance website 47
  • 48. Avoidance of Double Taxation Malta Romania Taiwan Mexico Russia Thailand Moldova Singapore Turkey Netherlands Slovak Republic UK Norway Slovenia Ukraine Panama South Africa USA Philippines Spain Uzbekistan Poland Sweden Vietnam Portugal Switzerland 48More extended information is available in the Israel Ministry of Finance website
  • 49. Cooperation in Industrial R&D North America Europe New York France Massachusetts Russia (Rusano, Skolkovo) Maryland Italy Virginia Germany Asia Wisconsin Greece China( Shanghai, Jiangsu, Most) Colorado Czech Republic India Illinois Bulgaria Taiwan Oregon Lithuania BIRD (Foundation) Slovenia SIIRD-Singapore (Foundation) Ontario CIIRDF (Foundation) Denmark KORIL-RDF-Korea (Foundation) Hungary Turkey South America Portugal Argentina Finland Uruguay Sweden Australia Brazil Ireland (Victoria) * Through EUREKA (40 country Multilateral Initiative)More extended information is available in the Israel Ministry of Finance website 49
  • 50. 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 Moldova Croatia Guatemala MongoliaMore extended information is available in the Israel Ministry of Finance website 50
  • 51. Bilateral Investment Treaties Montenegro Turkey Poland Turkmenistan Romania Ukraine Serbia Uruguay Slovakia Uzbekistan Slovenia South Africa ThailandMore extended information is available in the Israel Ministry of Finance website 51
  • 52. Economic Organizations Membership 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 OrganizationsMore extended information is available in the Israel Ministry of Finance website 52
  • 53. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 53
  • 54. Learn More Visit the Israel Ministry of Finance English website for more information: About the Ministry Economic Overview of Israel Ministry of Finance publications and reports Other publications and reports on the Israeli economy Ministry press releases 54
  • 55. Learn MoreClick to open:Israel Central Bureau of StatisticsBank of IsraelMinistry of Industry, Trade and LaborMinistry of Foreign AffairsIsrael Government Portal 55
  • 56. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 56
  • 57. Contact Mr. Roni Hershkovitz Follow us on Twitter Mr. Assaf Luxembourg Mr. Jonah Balakhaneh Follow us on Linkedin Overseas Economic Information International Affairs Department Subscribe our RSS Feeds Ministry of Finance State of Israel Subscribe our Newsletters Write us an Email Visit our Website 57