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Economic Highlights Newsletter, Q2 2011


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Israel’s Economic Highlights Newsletter, Q2 2011

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Economic Highlights Newsletter, Q2 2011

  1. 1. STATE OF ISRAEL MINISTRY OF FINANCE International Affairs Department July 2011 Economic Highlights 2nd Quarter 2011 Website: Follow us on Twitter Email: Follow us on Linkedin Table of ContentsHeadlines ......................................................................................................................... 1Latest News ..................................................................................................................... 2Monetary News and Capital Market ............................................................................... 4From the Press ................................................................................................................ 5Environmental Economy News ...................................................................................... 6Economic Figures ........................................................................................................... 7We Welcome Your Feedback.......................................................................................... 8 Headlines Raised Growth Forecasts for the Israeli Economy Page 2 Robust and Determined: News from Israels R&D Sector Page 3 Moodys, Fitch Left Israels 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: Hebrew:
  2. 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. thThe Israeli economy grew 4.7% in 2010, with a 7.6% growth in the 4 quarter of 2010. The Bank of Israel hasforecast 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 ExportersMinister of Finance, Dr. Yuval Steinitz, has asked the Knesset FinanceCommittee to approve a framework of guarantees for exporters in order tolaunch 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 theimportance of exports as a growth engine for the economy. The NIS 2.75 billion planwill expand the financing solutions available to exporters and will also increase thebasket 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 UnderwayThe Government Companies Authority Issued a Public Announcement for the Sale ofthe States Holdings in the Eilat Port Company. The port of Eilat handlesapproximately 6% of Israels maritime trade, and employs around 130 workers.Minister of Finance, Dr. Yuval Steinitz, said: "The privatization of the Eilat port willincrease exports and imports through Israels southern gateway and strengthen thecity 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: Hebrew:
  3. 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 tothe Noa and Yam Tethys fields off the coast of southern Israel. The company was instructed to present a drillingand development plan by August 1.(Source: Ministry of National Infrastructures, Globes, Ynet) Robust and Determined: News from Israels 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 Israels 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: Hebrew:
  4. 4. Monetary News and Capital Market Barclays Commends Israels Attractive Market ValuationBarclays chose the Israeli Currency (Shekel) as their foreign exchange pick for the EMEA (Europe, MiddleEast and Africa).According to a Barclays 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: Barclays, Globes) Moodys, Fitch Left Israels Ratings Unchanged Further Significant Support for the Israeli Governments Economic Policy: Moodys Credit Rating Agency Left Israels A1-Stable Rating Unchanged, Fitch Ratings Left Israels A Stable Rating Unchanged. Moodys representatives noted in their report that the A1 rating balances Israels economic and financial strength with the geopolitical challenges it faces. Vice President in Moodys 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 sovereigns external balance sheet." Ms. Purvi Harlalka, director of Fitchs 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: Moodys International Credit Rating Agency Releases Its Annual Credit Report on Israel, Leaving the Countrys A1-Stable Rating Unchanged Fitch Ratings Supports Israels Economic Policy, Leaving the Countrys A Stable Rating Unchanged (Source: Ministry of Finance, Moodys, Fitch Ratings) -4- 1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349 English: Hebrew:
  5. 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 IMDs 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. Israels 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 CountryAccording to a survey conducted by Gallup Institute, 63% of respondents in Israel thsaid 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 thnumbered from 0 to 10. In 2010, Israel was ranked by Gallup and Forbes as the 8 ndhappiest place in the world to live in. Also, Israel was ranked 22 in a 2010 Newsweeksurvey 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 budgetraised in the corresponding quarter of 2010, and performance in the first three months of the year34% more than in Q4 2010. This was the largest has been a pleasant surprise, reflecting a budgetamount raised since the collapse of Lehman surplus of NIS 2 billion as compared to a budgetBrothers 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 GDPhigh-tech capital raising in Q1/2011 rose by 39% will be met in 2011, and that governmental debtfrom Q4 2010, as Life sciences sector continues will decline from 75% of GDP in 2010, to 73% into 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: Hebrew:
  6. 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: SDLSDL was chosen by the Finance Ministry’s Inter-Ministerial Tenders Committee for Seawater Desalination asthe winner of the tender for financing, planning, building and operating the plant in Sorek. The plant, whose thconstruction will be completed in 2013, is the 4 BOT (Build-Own-Transfer) project to be built in cooperationwith 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 desalinatedwater, 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 ChinaIsraeli desalination company IDE Technologies has introduced a greener way to pullsalt 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 apower 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. AvshalomFelber, 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 thermaldesalination plant today. Read More(Source: Israel NEWTech, Israel Trade Commission in Sydney, Australia) Arava Power Inaugurates Israels 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 IsraelElectric Corporation will pay Arava Power NIS 1.5 CleanTech 2011 Expo websiteper 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: Hebrew:
  7. 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 99.8 100.3 100.8 101.0 101.3 101.4 101.8 102.0 102.3 102.5 103.1104103102101100999897 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: Hebrew:
  8. 8. Balances 2010 Q4 2010 Q1 2011Current account Surplus 2.9% 1.0% 0.6%As % of GDPBudget Deficit 3.7% -- --Central governmentGross Debt (% of GDP) 76.4% -- --General government gross financial liabilities Investments 2010 Q3 2010 Q4 2010 Q1 2011Gross 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$BGross Foreign Investments in Israel (Billion$) 17.6$B 3.7$B 6.9$B 5.1$BGross Foreign Direct Investments (Billion$) 5.2$B 1.7$B 2.4$B 2.6$BSee 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: Hebrew: