Economic Highlights Presentation, Q3 2011

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Israel’s Economic Highlights Presentation, Q3 2011

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Economic Highlights Presentation, Q3 2011

  1. 1. STATE OF ISRAEL MINISTRY OF FINANCE International Affairs DepartmentECONOMIC HIGHLIGHTS September 2011, 3rd Quarter 2011 Click to start
  2. 2. Contents Economic Figures Balances International Comparisons Israel and the OECD Note: You can return to the beginning International Agreements of each chapter by clicking the emblem of Israel on the top of each slide. Relevant Sites Contact Us
  3. 3. Economic Figures Main Economic Indicators GDP and Business GDP Growth: Israel compared to the World Major GDP Components Exports of Goods and Services Main Trading Partners Foreign Investments Unemployment & Participation Rates Inflation Rate Inflation Rate Worldwide Growth of Main GDP Components 2008 BACK TO CONTENTS
  4. 4. Main Economic Indicators 2010 2010 2011 2011 Criteria 2009 2010 Q3 Q4 Q1 Q2 GDP 193.0 202.0 50.7 51.7 52.2 52.6 (constant prices, 2005, in $B)* Real GDP Growth Rate 0.8% 4.7% 4.7% 7.7% 4.6% 3.3% (%) GDP per Capita 28,581$ 29,531$ -- -- -- -- (PPP adjusted) GDP per Capita Growth Rate -1.1% 2.8% 2.7% 5.5% 2.6% 1.6% (%, 2005 prices) Exports (Goods & Services) $B* 76.3 86.6 21.9 22.4 23.1 23.1 (As Percentage of GDP) (37.7%) (42.9%) (43.1%) (43.4%) (44.1%) (43.9%) Imports (Goods & Services) $B* 72.0 81.1 20.1 21.0 22.3 23.0 (As Percentage of GDP) (37.3%) (40.1%) (39.7%) (40.6%) (42.7%) (43.8%) Unemployment Rate 7.6% 6.6% 6.6% 6.5% 6.0% 5.5%* Using a public exchange rate of 1$ = 3.65 NIS CONTINUE** EstimatedSource: Ministry of Finance, IMF
  5. 5. Main Economic Indicators Criteria 2007 2008 2009 2010 Total Gross Debt 77.8% 77.1% 79.3% 76.3% (% of GDP) General Government Expenditure 43.6% 43.0% 43.0% 42.6% (Percentage of GDP) Current Account Surplus 2.9% 0.8% 3.6% 2.9% (% of GDP) Inflation Rate 0.5% 4.6% 3.3% 2.7% (CPI, yearly average) CONTINUESource: Ministry of Finance
  6. 6. Main Economic Indicators 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 In 2011, S&P upgraded their overseas long term credit rating for Israel to A+. Aa3/AA- Also, in 2011 Moody’s and Fitch reaffirmed their credit rating for Israel. A1/A+ A2/A A3/A- Baa1/BBB+ Baa2/BBB Baa3/BBB- 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 Moodys S&P Fitch CONTINUESource: Ministry of Finance
  7. 7. GDP and Business GDP Annual rate of change, constant prices In 2010, Israel has recovered from the global In the 4th quarter of 2010, Israel10% economic crisis, and is back to previous years’ experienced exceptional growth rates 8.7%9% growth rates8% 7.7% 7.0%7% 6.0% 5.7% 5.4%6% 5.4% 5.2% 4.7% 4.7% 5.0% 4.7% 4.6%5% 4.2%4% 3.3%3% 1.9%2% 0.8%1% 0.2%0% 2006 2007 2008 2009 2010 2010 Q3 2010 Q4 2011 Q1 2011 Q2-1% GDP Business GDP-2% CONTINUE Source: Ministry of Finance.
  8. 8. GDP Growth Israel compared to advanced economies* (annual rate of change, constant prices) 5.7%5.6% 5.4% 5.0% 4.9% 4.7%4.6% 4.2%3.6% 3.1% 3.0% 3.0% 2.7% 2.7%2.6%1.6% 0.8%0.5% 0.2%-0.5% 2004 2005 2006 2007 2008 2009 2010 Since 2004, Israel’s growth rate has exceeded the average growth rate-1.5% of advanced economies. In 2009, as most of the world experienced a decline in GDP,-2.5% Israel experienced a 0.8% growth in it’s GDP-3.5% Advanced Economies Israel Growth -3.4% CONTINUE Source: Ministry of Finance, IMF
  9. 9. Major GDP Components Annual rate of change, in constant prices20.0% Global Economic Crisis 14.6%15.0% 13.6% 13.6% 12.6%10.0% 9.3% 5.9% 6.3% 5.9% 5.0% 4.3% 4.1% 3.1% 3.1% 3.0% 2.1% 2.2% 2.2% 1.4% 1.4% 0.0% 2006 2007 2008 2009 2010 -5.0% -5.8% In 2010, Investment in Fixed Assets and Export of Goods and-10.0% Services recovered sharply, after they were contracted severely in 2009 due to the economic crisis. -12.5%-15.0% Private Consumption Government Consumption Investment in Fixed Assets Exports of Goods and Services CONTINUE Source: Ministry of Finance
  10. 10. Exports of Goods and Services US $ Billions, current prices Global 90.0 Economic 80.0 Services Crisis 70.0 24.1 Goods 24.7 60.0 21.1 22.0 19.3 50.0 17.4 16.0 40.0 13.4 30.0 57.2 45.9 55.7 50.3 20.0 43.3 36.7 39.8 30.2 10.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 CONTINUESource: Ministry of Finance
  11. 11. Israel’s Main Trading Partners 2010, US $ Billions 720 Imports 618 Exports16 514 412 6.7 3 6.110 18.5 2 3.78 3.2 2.4 2.2 1 2.1 1.8 1.8 1.86 04 6.02 3.1 2.9 2.3 1.8 1.7 1.3 1.3 1.30 CONTINUE *Since July 1997 the data on trade with Hong-Kong is added to the data on China Source: Central Bureau of Statistics
  12. 12. Israel’s Main Trading Partners US $ Billions 30 29.7 North America 25 26.8 26.4 Asia 22.9 20 Europe 15 13.7 13.3 10 11.9 10.0 Exports 8.3 8.7 7.3 5 6.330 025 21.2 19.9 19.620 21.9 17.6 Imports 19.2 18.915 15.4 13.810 12.2 9.8 9.550 CONTINUE Source: Central Bureau of Statistics
  13. 13. Net Foreign Investments in Israel US $ Billion25 Direct Investments Total Investments20 19.4 17.6 15.3 Global Economic15 14.4 Crisis 10.9 10.7 10.710 9.5 8.8 8.3 4.9 5.25 4.3 4.3 4.4 3.3 2.4 1.60 2002 2003 2004 2005 2006* 2007 2008 2009 2010 CONTINUE * 2006 is exceptional due to a large acquisition by Teva Pharmaceutical Industries Ltd Source: Ministry of Finance
  14. 14. Unemployment and Participation As % of total labor force 8.0% 58.5% 7.6% 58.0% 7.5% 57.7% 57.4% 57.5% 7.2% 57.7% 57.5% 57.1% 7.0% 56.7% 57.0% 56.8% 6.9% 6.6% 6.5% 6.5% 56.8% 6.5% 56.5% 56.0% 6.0% Since the 2nd quarter of 2009 unemployment is relatively 6.0% 55.5% decreasing, hand in hand with a relative increase in 5.5% participation rate since the 1st quarter of 2010. 5.5% 55.0% Unemployment Rate Participation in the Labor Force 5.0% 54.5% Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 CONTINUESource: Ministry of Finance
  15. 15. Inflation Rate Rate of change in CPI, yearly average, 2008=1005% 4.6%4% 3.3%3% 2.7% 2.1%2% 1.4%1% 0.7% 0.5%0% 2003 2004 2005 2006 2007 2008 2009 2010 -0.4%-1% CONTINUE Source: Central Bureau of Statistics, Ministry of Finance
  16. 16. Inflation Rate Rate of change in CPI, 12 months average, 2008=100105 104.2 104.0104 103.7 103.6 103.1103 102.5 102.3 102.0102 101.8 101.4 101.3 101.010110099 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011 Aug 2011 CONTINUE Source: Central Bureau of Statistics, Ministry of Finance
  17. 17. Inflation Rate Worldwide Annual rate of change in CPI, 2010 The Israeli economy demonstrated a high level of stability 3.3% compared to other countries throughout the global economic crisis3% 2.7% 2.4% 2.3% 2.2% 1.6% 1.6% 1.7% 1.4% 1.2%1% 0.7% 0.2% -0.7% -0.5% -0.3% 0.0% ay nd n y el l nd m A d ga an pa an US ra iu rw la la rtu m Ja lg Is nl Ire er No Be er Fi Po it z G Sw-1% -0.9% -1.4% -1.7% -1.6% 2009 (left column)-3% 2010 (right column) CONTINUE Sources: Ministry of Finance, IMF
  18. 18. Growth of Main GDP Components for Previous Quarter Criteria Q2 2011 Real GDP + 3.3% Business GDP + 1.9% Exports + 3.4% Private Consumption + 2.2% Public Consumption - 4.4% Investment in Fixed Assets + 8.8% NEXT CHAPTER: BALANCES BACK TO CONTENTSSource: Ministry of Finance
  19. 19. BalancesGross Public DebtBudget Deficit – Target and ExecutionBudget Deficit and General Government ExpenditureCurrent Account and Net Foreign DebtGross Tax Burden BACK TO CONTENTS
  20. 20. Gross Public Debt As % of GDP Since 2003, gross public debt has been on a consistent downward trend, only interrupted by the105% extraordinary circumstances surrounding the 2009 global economic crisis 99.1%100% 97.4% 93.8% 95% 90% Global Economic 84.3% 85% Crisis 79.3% 80% 77.8% 77.1% 76.3% 75% 2003 2004 2005 2006 2007 2008 2009 2010 CONTINUESource: Ministry of Finance
  21. 21. Budget Deficit – Target and Execution in NIS million, current prices 2009 Q3 2009 Q4 2009 Total 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Total 2011 Q1 2011 Q2 -500 -1980 -3626 -3657 -5500 -4,452 -5975 -6721-10500-15500 -16,061 -16161-20500 For the first time in its history, Israel enacted a biennial budget for the years 2009-2010. In both years,-25500 Israel came in under budget target.-30500 The proven effectiveness and -30165 functionality of the biennial budget have led the government to adopt-35500 the biennial budget for a second period through 2011-2012.-40500 -39,286 Quarterly Budget Execution Yearly Budget Execution -42924-45500 -44,355 Yearly Budget Target CONTINUE Source: Ministry of Finance
  22. 22. Budget Deficit and General Government Expenditure Budget Deficit 6% (% of GDP) 5.2% 5% 4% 3.7%General Government Expenditure 3%(% of GDP) 2.2% 2% 1.8%46% 0.9% 1% 45.3% 0.0%45% 0% 44.7%44% 43.6% 43.0% 43.0%43% 42.6%42%41% 2 5 2 6 2 7 2 8 2 9 2 1 CONTINUESource: Ministry of Finance
  23. 23. Current Account Balance and Net Foreign Debt Since 2003, the current account balance is positive, and is accompanied by a decrease of net foreign debt 30% 26.0% 26.2% 25% 22.1% 22.3% 20% 14.4% 15% Current Account Surplus 10.8% (% of GDP) 10% 4.4% 5% 1.7% 5.1%5.0% 0% 2003 2004 2005 2006 2007 2008 2009 20104.0% 3.6% 3.1% 2.9% 2.9%3.0% Net Foreign Surplus* 2.3%2.0% (% of GDP) 1.2%1.0% 0.8%0.0% 2003 2004 2005 2006 2007 2008 2009 2010 CONTINUE *Current Prices, using a public exchange rate of 1$ = 3.65 NIS Source: Ministry of Finance.
  24. 24. Gross Tax Burden as % of GDP38% 36.2% 35.9%36% 35.5% 35.6% 33.8%34% 32.4%32% 31.4%30%28% OECD countries average: 34.8% (2008 average) NEXT CHAPTER: INTERNATIONAL COMPARISONS BACK TO CONTENTS Source: Ministry of Finance, OECD
  25. 25. International Comparisons IMD World Competitiveness Yearbook WEF Global Competitive Index Central Bank Interest Rates: Israel and U.S.A NASDAQ and Tel-Aviv 100 (monthly average) BACK TO CONTENTS
  26. 26. 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) CONTINUESource: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
  27. 27. IMD World Competitiveness Yearbook 2011 Information technology skills Central bank policy Flexible and adaptability Entrepreneurship CONTINUESource: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
  28. 28. IMD World Competitiveness Yearbook 2011 Total expenditure on R&D (as % of GDP) Scientific research Venture capital Innovative capacity CONTINUESource: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2011
  29. 29. WEF Global Competitiveness Index 2011-2012 The World Economic Forum ranked Israel 22nd out of 142 countries for 2011-2012 CONTINUESource: World Economic Forum, Global Competitiveness Index, 2011-2012
  30. 30. WEF Global Competitiveness Index 2011-2012 Quality of scientific research institutions Venture capital availability Utility patents per million population Strength of investor protection CONTINUESource: World Economic Forum, Global Competitiveness Index, 2011-2012
  31. 31. WEF Global Competitiveness Index 2011-2012 Government procurement of advanced Capacity for innovation technology products Firm-level technology absorption University-industry collaboration in R&D CONTINUESource: World Economic Forum, Global Competitiveness Index, 2011-2012
  32. 32. Central Bank Interest Rates: Israel and U.S.A3.5% 3.25% The Bank of Israel was the first in the western world to raise interest since the outburst of the economic crisis. 3.00%3.0% The rate was raised gradually from 0.5% to 3.25%2.5% 2.00% 2.00%2.0% 1.50%1.5% 1.25%1.0% 0.75% 0.50% Bank of Israel Rate (BOI)0.5% U.S. Federal Funds Rate (FED) = 0%0.0% CONTINUESource: Ministry of Finance
  33. 33. NASDAQ & Tel Aviv 100 monthly average4,000.00 1300 Tel Aviv 100 corresponds with the NASDAQ to current events 12003,500.00 1100 10003,000.00 9002,500.00 800 7002,000.00 600 5001,500.00 400 Nasdaq (left scale) Tel Aviv 100 (right scale)1,000.00 300 10 11 12 10 11 12 10 11 12 9 2 3 4 5 6 7 8 9 2 3 4 5 6 7 8 9 2 3 4 5 6 7 8 09 10 11 20 20 20 n n n Ja Ja Ja NEXT CHAPTER: ISRAEL AND THE OECD BACK TO CONTENTS Source: Ministry of Finance
  34. 34. Israel and the OECD Israel was invited as a full member in the OECD on May 10th, 2010, and officially joined in September 10th, 2010. Expenditure on R&D Real GDP Growth GDP per Capita Unemployment BACK TO CONTENTS
  35. 35. Expenditure on R&D As % of GDP, 2008, or latest available year5% 4.27% Israel is ranked 1st of all OECD countries by expenditure on R&D (research & development)4% as a percentage of GDP (4.27 %), demonstrating innovation, development and creativity.4%3%3% 2.28%2%2%1%1%0% CONTINUESource: OECD
  36. 36. Real GDP Growth 3-year average at end of period12% Israel’s 3-year average growth rate is higher then most OECD members.10% For Israel’s year-on-year graph, see slide no.78%6% 4.83%4% 2.13%2%0% CONTINUESource: OECD
  37. 37. GDP per capita Current prices and PPP’s, 200990,00080,000 Although no comparable data for 2010 exists, it is reasonable to assume a diminishing gap between Israel and the OECD average70,000 For Israel’s adjusted PPP GDP Per Capita, see slide no.460,00050,00040,000 33,08230,000 27,66120,00010,000 0 CONTINUESource: OECD
  38. 38. Unemployment Rate 2010 Israel’s unemployment rate is in an ongoing downtrend, reaching an historic low25% level of 5.5% in Q2 2011. During the last global economic crisis, Israel experienced a relatively mild increase in unemployment rates.20% For Israel’s unemployment, see slide no.1415%10% 8.5% 6.8% 5% 0% NEXT CHAPTER: INTERNATIONAL AGREEMENTS BACK TO CONTENTSSource: Ministry of Finance, OECD
  39. 39. International Agreements Israel’s Free Trade Agreements Avoidance of Double Taxation Agreements Cooperation in Industrial R&D Agreements Bilateral Investment Treaties International Organization Memberships BACK TO CONTENTS
  40. 40. Israel’s Free Trade Agreements 1985 USA 1992 EFTA QIZ Agreements 1997 Turkey Egypt (2004) 1997 Canada Jordan (1998) 1999 Mexico 2000 European Union (Association Agreement) 2007 MERCOSUR (Argentina not yet in force) CONTINUESource: Ministry of Finance
  41. 41. Avoidance of Double Taxation Agreements Austria Denmark Ireland Belarus Estonia Italy Belgium Ethiopia Jamaica Brazil Finland Japan Bulgaria France Latvia Canada Germany Lithuania China Greece Luxembourg Czech Republic Hungary Mexico Croatia India CONTINUESource: Ministry of Finance
  42. 42. Avoidance of Double Taxation Agreements Malta Russia Taiwan Moldova Singapore Thailand Norway Slovakia Vietnam Netherlands Slovenia Turkey Panama South Africa Ukraine Philippines South Korea United kingdom Portugal Spain Uzbekistan Poland Sweden U.S.A Romania Switzerland CONTINUESource: Ministry of Finance
  43. 43. Cooperation in Industrial R&D Agreements North America Europe France New York Russia (Rusano, Skolkovo) Massachusetts Italy Maryland Virginia Germany Asia Greece China( Shanghai, Jiangsu, Most) Wisconsin India Colorado Czech Republic Taiwan Illinois Bulgaria Oregon Lithuania SIIRD-Singapore (Foundation) Slovenia KORIL-RDF-Korea (Foundation) BIRD(Foundation) Denmark Ontario CIIRDF (Foundation) Hungary Turkey Portugal South America Finland Australia Argentina Sweden Uruguay Ireland (Victoria) Brazil * Through EUREKA (40 country Multilateral Initiative) CONTINUESource: MATIMOP
  44. 44. 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 Macedonia* Croatia* Guatemala Moldova* The treaty is either under negotiations, pending ratifications, under negotiations for amendment, or terminated, while existing CONTINUEinvestments are still protected. See exact comments in the Bilateral Investments Treaties page in our website.Source: Ministry of Finance
  45. 45. Bilateral Investment Treaties Mongolia South Africa* Montenegro Thailand Peru* Turkey Poland Turkmenistan Romania* Ukraine* Serbia Uzbekistan Slovakia Vietnam* Slovenia** The treaty is either under negotiations, pending ratifications, under negotiations for amendment, or terminated, while existing CONTINUEinvestments are still protected. See exact comments in the Bilateral Investments Treaties page in our website.Source: Ministry of Finance
  46. 46. Main International Economic Organizations Membership: 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 Organizations NEXT CHAPTER: RELEVANT SITES BACK TO CONTENTSSource: Ministry of Finance
  47. 47. Relevant SitesMinistry of FinanceBank of IsraelCentral Bureau of StatisticsIsraeli Government PortalIsrael Securities AuthorityMinistry of Industry, Trade and LaborMinistry of Foreign Affairs CONTACT US BACK TO CONTENTS
  48. 48. WE WELCOME YOUR FEEDBACKMr. Roni Hershkovitz Follow us on TwitterDirectorOverseas Economic InformationInternational Affairs Department Follow us on LinkedinMinistry of FinanceJerusalem Subscribe to our RSS FeedsIsraelMr. Assaf Luxembourg Subscribe to our NewslettersOverseas Economic InformationInternational Affairs Department Write us an EmailMinistry of FinanceJerusalemIsrael Visit our Website START OVER

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