Israel’s Economic Highlights Presentation, Q4 2011

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Israel’s Economic Highlights Presentation, Q4 2011

  1. 1. STATE OF ISRAEL MINISTRY OF FINANCE International Affairs DepartmentEconomic Highlights Presentation 4th Quarter 2011 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. 2. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 2
  3. 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. 4. Economic Figures Criteria 2009 2010 2010 Q4 2011 Q1 2011 Q2 2011 Q3GDP 189.9 199.0 50.9 51.5 51.9 52.4(constant prices, 2005, in $B)*Real GDP growth rate 0.8% 4.8% 7.2% 4.7% 3.5% 3.4%(% change)GDP per capita, based on PPP $28,526 $29,901 -- -- -- --(Current international $)GDP per capita growth rate -0.9% 2.9% 8.6% 5.2% 2.6% 5.3%(%, 2005 prices)Exports (goods & services), $B* 75.1 85.3 22.1 22.5 22.6 21.5(As % of GDP) 39.5% 42.9% 43.4% 43.7% 43.5% 41.0%Imports (goods & services), $B* 71.0 80.0 20.7 21.9 22.4 22.0(As % of GDP) 37.4% 40.2% 40.7% 42.5% 43.2% 42.0%Unemployment rate 7.6% 6.6% 6.5% 6.0% 5.5% 5.6%* Using a public exchange rate of 1USD=3.7NIS (2010 average)** Estimated 4Additional Sources: IMF
  5. 5. Economic Figures Criteria 2005 2006 2007 2008 2009 2010Public debt 93.8% 84.3% 77.8% 77.1% 79.3% 76.3%(As % of GDP)General government expenditure 45.3% 44.7% 43.6% 43.0% 43.0% 42.6%(As % of GDP)Current account surplus 3.1% 5.1% 2.9% 0.9% 3.6% 2.9%(As % of GDP)Inflation rate 1.4% 2.1% 0.5% 4.6% 3.3% 2.7%(CPI, yearly average, % change)Budget deficit 1.8% 0.9% 0.0% 2.2% 5.2% 3.7%(As % of GDP) 5
  6. 6. GDP and Business GDP Annual rate of change, constant prices, 200511% In 2010, Israel has recovered from the global economic crisis, and is back to previous years’ growth rates. In the 3rd quarter of 2011, business GDP recovered sharply.9% 8.6% 7.2%7% 6.8% 6.8% 6.1% 6.1% 5.6% 5.8% 5.5% 5.3% 5.2% 4.8% 4.9% 4.8% 4.7%5% 4.5% 4.0% 3.5% 3.4%3% 2.6% 2.3% 1.5%1% 0.8% 0.4%-1% -0.3% -0.6% -1.2% -1.0%-3% GDP Business GDP 6
  7. 7. Major GDP Components Annual rate of change, constant prices, 200520% Global economic crisis15% 14.5% 13.7% 13.6% 13.1%10% 9.2% 6.3% 6.6% 5.5% 5% 4.2% 4.4% 3.0% 3.3% 2.8% 2.1% 2.2% 2.2% 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. 8. Exports of Goods and Services US $ Billions, constant prices, 200590 Global economic crisis8070 24.09 24.2360 21.13 21.98 19.2750 17.45 16.0340 13.3930 57.71 56.09 50.29 43.32 46.3320 39.77 36.66 30.1910 0 Services Goods* Using a public exchange rate of 1USD=3.7NIS (2010 average) 8
  9. 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 1 8 0 6.0 6 4 3.1 2.9 2.3 1.8 1.7 1.3 1.3 1.3 2 0* Since July 1997 the data on trade with Hong-Kong is added to the data on China 9Additional Sources: Central Bureau of Statistics
  10. 10. Main Trading Partners US $ Billions, 201035.0 Imports30.0 29.7 26.8 26.525.0 22.920.015.0 13.2 13.0 11.710.0 9.8 35.0 8.3 8.7 Exports 6.3 7.3 5.0 30.0 0.0 25.0 2007 2008 2009 2010 19.9 21.9 20.0 17.6 19.6 21.2 18.9 19.2 15.0 15.4 12.9 12.0 10.0 9.6 9.3 Europe 5.0 Asia 0.0 North America 2007 2008 2009 2010 10 Additional Sources: Central Bureau of Statistics
  11. 11. Gross Domestic Capital Formation As % of GDP21% 20.3%20% 19.6% 19.2% 19.3%19% 18.9% 18.0% 18.1%18% 17.9% 17.6%17%16% 11
  12. 12. Foreign Investments US $ Billions2520 19.4 17.6 15.315 14.4 10.8 10.9 10.710 9.5 8.8 8.3 4.9 5.2 5 4.3 4.3 4.4 3.3 2.4 1.6 0 Total Investments Direct Investments* 2006 is exceptional due to a large acquisition by Teva Pharmaceutical Industries Ltd. 12
  13. 13. Unemployment and Participation As % of total labor force9% 59% Since the 2nd quarter of 2009 unemployment is relatively decreasing, hand in hand with a relative increase in participation rate since the 1st quarter of 2010.8% 58% 57.7% 57.7% 7.9% 57.5% 57.49% 57.4% 7.6% 7.5% 57.2% 57.0% 7.2%7% 56.8% 56.8% 56.8% 57% 56.8% 56.7% 6.9% 6.5% 6.6% 6.4% 6.5%6% 56% 6.0% 5.5% 5.6%5% 55% Unemployment Rate Participation in the Labor Force4% 54% Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 13
  14. 14. Consumer Price Index Last 24 monthly averages, 2010=100105104 104.1 104.2 104.0 104.0 104.0 103.6 103.7103 103.1 102.5 102.3102 102.0 101.8 101.4 101.3101 101.0 100.8 100.3100 99.8 99.599 99.1 99.1 99.2 98.598 98.2 98.3979695 14Additional Sources: Central Bureau of Statistics
  15. 15. Inflation Rate Rate of change in consumer price index, yearly average5% 4.6%4% 3.3%3% 2.7% 2.1%2% 1.4%1% 0.7% 0.5%0% -0.4%-1% 15
  16. 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. 17. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 17
  18. 18. International ComparisonsGross Public DebtBudget DeficitGeneral Government ExpenditureCurrent Account SurplusNet Foreign SurplusGross Tax Burden 18
  19. 19. Gross Public Debt As % of GDP105% Since 2003, gross public debt has been on a consistent downward trend, only interrupted by the extraordinary circumstances surrounding the 2009 global economic crisis.100% 99.1% 97.4%95% 93.8%90% Global economic crisis85% 84.3%80% 79.3% 77.8% 77.1% 76.3%75%70% 19
  20. 20. Budget DeficitAs % of GDP6% 5.2% 5.2%5%4% 3.7% 3.5%3% 2.2%2% 1.8%1% 0.9% 0.0%0% 20
  21. 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 -4,862 -6,721 -6,371-10,000 -16,061 -16,161-20,000-30,000 -30,165-40,000 -39,286 -42,924 -44,355-50,000 Quarterly Budget Execution Yealy Budget Execution Yearly Budget Target 21
  22. 22. General Government Expenditure As % of GDP51% 50.1%50%49%48% 47.3%47%46% 45.3%45% 44.7%44% 43.6% 43.0% 43.0%43% 42.6%42%41%40%39%38% 22
  23. 23. Current Account SurplusAs % of GDP6% 5.1%5%4% 3.6% 3.1%3% 2.9% 2.9% 2.3%2% 1.2%1% 0.9%0% 23
  24. 24. Net Foreign Surplus As % of GDP30% 26.3% 26.6%25% 22.5% 22.6%20% 14.7%15% 10.9%10%5% 4.5% 1.7%0%* Using a public exchange rate of 1USD=3.7NIS (2010 average) 24
  25. 25. Gross Tax Burden As % of GDP37% 36.2% 35.9%36% 35.5% 35.5% 35.6%35% OECD countries average: 34.8% (2008 average)34% 33.8%33% 32.4%32% 31.4%31%30% 25Additional Sources: OECD
  26. 26. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 26
  27. 27. International ComparisonsGDP GrowthInflation RatesIsrael on IMD RankingsIsrael on WEF RankingsInterest Rates: Israel & the U.S.Stock Indices: NASDAQ & Tel-Aviv 100 27
  28. 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% 4.0%4% 3.1% 3.1% 3.1% 2.7% 2.8%2% 0.8% 0.1%0%-2%-4% Israel Advanced Economies -3.7% 28Additional Sources: IMF
  29. 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% 1.7% 1.6% 1.6% 1.6% 1.4% 1.2%1% 0.7% 0.1% 0.2%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. 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. 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. 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. 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. 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. 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. 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% 3.00% 2.75%2.5% 2.50%2.0% 2.00% 1.75%1.5% 1.50% 1.25%1.0%0.5% Bank of Israel Federal Reserve =00.0% 36
  37. 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. 38. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 38
  39. 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. 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. 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. 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. 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. 44. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 44
  45. 45. International AgreementsIsrael’s Free Trade AgreementsAvoidance of Double TaxationCooperation in Industrial R&DBilateral Investment TreatiesEconomic Organizations 45
  46. 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. 47. Avoidance of Double Taxation 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 IndiaMore extended information is available in the Israel Ministry of Finance website 47
  48. 48. Avoidance of Double Taxation 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 SwitzerlandMore extended information is available in the Israel Ministry of Finance website 48
  49. 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. 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 Macedonia Croatia Guatemala MoldovaMore extended information is available in the Israel Ministry of Finance website 50
  51. 51. Bilateral Investment Treaties Mongolia South Africa Montenegro Thailand Peru Turkey Poland Turkmenistan Romania Ukraine Serbia Uzbekistan Slovakia Vietnam SloveniaMore extended information is available in the Israel Ministry of Finance website 51
  52. 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. 53. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 53
  54. 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. 55. Learn MoreClick to open:Israel Central Bureau of StatisticsBank of IsraelMinistry of Industry, Trade and LaborMinistry of Foreign AffairsIsrael Government Portal 55
  56. 56. Table of Contents1 Main Economic Indicators2 Balances3 International Comparisons4 Israel in the OECD5 International Agreements6 Learn More7 Contact 56
  57. 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

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