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    Israel economics  2013  Q2 Israel economics 2013 Q2 Presentation Transcript

    • 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
    • 3 4 2 5 Table of Contents 7 8 6 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
    • 3 4 2 5 Table of Contents 7 8 6 5 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 GDPAnnual 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% Israel Poland SlovakRepublic Chile Canada Norway Mexico Finland Germany Sweden Estonia Korea Australia Switzerland Belgium Luxembourg Turkey Japan UnitedKingdom NewZealand Austria CzechRepublic OECD Netherlands France Slovenia Denmark UnitedStates Euroarea Hungary Italy Iceland Portugal Ireland Spain Greece 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.
    • 3 4 2 5 Table of Contents 7 8 6 12 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 25 Exports * 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-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 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 Agreements1985 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
    • 3 4 2 5 Table of Contents 7 8 6 24 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% 2009 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4 2013 Q1 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
    • 3 4 2 5 Table of Contents 7 8 6 29 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 Greece Italy Portugal Iceland Ireland UnitedStates OECD UnitedKingdom France Belgium Euroarea Spain Germany Hungary Canada Austria Netherlands Israel Poland Finland Denmark Slovenia SlovakRepublic NewZealand CzechRepublic Sweden Norway Switzerland Korea Luxembourg Australia Estonia 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 TermRating Firm RatingRating A1 Stable A1Long Moody's P1-Short A+ Stable A+Long Standard & Poor's A-1A-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 KoreaPanama 37
    • 3 4 2 5 Table of Contents 7 8 6 38 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 South Korea New Zealand Israel Canada Euro Area United Kingdom United States Switzerland Japan Central Bank’s Interest Rates International Comparison Source: Specified Countries’ Central Banks
    • 3 4 2 5 Table of Contents 7 8 6 42 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 1.8 1.9 1.8 1.7 1.6 1.3 0 1 2 3 4 5 Israel Finland Germany France Belgium EU27 Canada UnitedKingdom Ireland Norway CzechRep. Spain 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)
    • 3 4 2 5 Table of Contents 7 8 6 50 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
    • 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:
    • 3 4 2 5 Table of Contents 7 8 6 53 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
    • 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 Write us an email ronihe@mof.gov.il orik@mof.gov.il amichai@mof.gov.il Visit our Website Follow us on Twitter Follow us on Linkedin Follow us on YouTube Follow us on Flickr Subscribe to our RSS Feeds Subscribe to our Newsletters