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STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT

STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT. ECONOMIC HIGHLIGHTS 2 nd Quarter 2010 Click to start. Note: You can return to the beginning of each chapter by clicking the emblem of Israel on the top of each slide. Contents. Economic Figures. Balances.

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STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT

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  1. STATE OF ISRAELMINISTRY OF FINANCEINTERNATIONAL AFFAIRS DEPARTMENT ECONOMIC HIGHLIGHTS 2nd Quarter 2010 Click to start

  2. Note: You can return to the beginning of each chapter by clicking the emblem of Israel on the top of each slide. Contents • Economic Figures • Balances • International Comparisons • Israel and the OECD • International Treaties • Relevant Sites • Contact Us

  3. EconomicFigures 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. Main Economic Indicators *Using a public exchange rate of 1$ = 3.82NIS ** In current prices CONTINUE Source: Ministry of Finance, IMF

  5. Main Economic Indicators CONTINUE Source: Ministry of Finance

  6. Moody's / S&P & Fitch Aa3/AA- A1/A+ A2/A A3/A- Baa1/BBB+ Baa2/BBB Baa3/BBB- Main Economic Indicators All 3 rating firms have reaffirmed Israel’s rating, without any downgrade, during the global economic crisis in 2009. CONTINUE Source: Ministry of Finance

  7. GDP and Business GDPAnnual rate of change (%), in Constant Prices In recent years, prior to the global economic Since Q2 2009, Israel is experiencing crisis, the Israeli economy experienced high constant growth, indicating a fast growth rates recovery from the global economic crisis CONTINUE Source: Ministry of Finance.

  8. GDP GrowthIsrael compared to Advanced Economies* (Annual rate of change (%), in constant prices) 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 0.7% growth in it’s GDP CONTINUE • Weighted average: US – 39%, Euro area – 46.5%, Japan – 3%, UK – 5%, Asian Newly Industrialized countries – 6.5% • Source: Ministry of Finance.

  9. Global Economic Crisis Major GDP Components(Annual rate of change (%), in constant prices) In 2009, due to the global economic crisis, Investment in Fixed Assets and Export of Goods and Services contracted severely. However, the strength and resiliency of Israel's economy in a time of crisis is demonstrated by the positive growth of both Private Consumption and Government Consumption during the same period. CONTINUE Source: Ministry of Finance

  10. Global Economic Crisis Exports of Goods and Services ($B) *Using a public exchange rate of 1$ = 3.82NIS ** In current prices CONTINUE Source: Ministry of Finance

  11. 2008 2009 2008 2009 Israel’s Main Trading Partners(US$ Billions, excluding diamonds) Imports In 2009, China became a relatively bigger trading partner for Israel Exports CONTINUE * Since July 1997 the data on trade with Hong-Kong is added to the data on China Source: Central Bureau of Statistics

  12. Global Economic Crisis Net Foreign Investments in Israel (In $ Billion) CONTINUE Source: Ministry of Finance

  13. Unemployment and Participation (As % of Total Labor Force) As Israel grows out of the global recession, unemployment is decreasing CONTINUE Source: Ministry of Finance

  14. Inflation Rate (Rate of Change in CPI, yearly average) CONTINUE * July 2009 index compared to July 2008 Source: Central Bureau of Statistics, Ministry of Finance

  15. Inflation Rate Worldwide (Annual rate of change in CPI) The Israeli economy demonstrated a high level of stability compared to other countries throughout the global economic crisis CONTINUE Sources: Ministry of Finance, IMF

  16. Growth of Main GDP Components for Previous Year NEXT CHAPTER: BALANCES BACK TO CONTENTS Source: Ministry of Finance

  17. Balances Gross Public Debt Budget Deficit – Target and Execution Budget Deficit and General Government Expenditure Current Account and Net Foreign Debt Gross Tax Burden BACK TO CONTENTS

  18. Global Economic Crisis Gross Public Debt (as percentage of GDP) Since 2003, gross public debt has been on a consistent downward trend, only interrupted by the extraordinary circumstances surrounding the 2009 global economic crisis CONTINUE Source: Ministry of Finance

  19. Quarterly Budget Execution Yearly Budget Execution Yearly Budget Target Budget Deficit – Target and Execution For the first time in its history, Israel enacted a biennial budget for the years 2009-2010 In 2009 Israel came in under budget target. CONTINUE Source: Ministry of Finance

  20. Budget Deficit and General Government Expenditure Budget Deficit (% of GDP) General Government Expenditure (% of GDP) CONTINUE Source: Ministry of Finance

  21. 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 Current Account Surplus (% of GDP) Net Foreign Debt (% of GDP) CONTINUE Source: Ministry of Finance.

  22. Gross Tax Burden (as % of GDP) OECD countries average: 35.8% (2007 average) OECD countries average: 35.2% (2008 average estimated by OECD) NEXT CHAPTER: INTERNATIONAL COMPARISONS BACK TO CONTENTS Source: Ministry of Finance, OECD

  23. 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

  24. IMD World Competitiveness Yearbook 2010 The Institute for Management Development ranked Israel17thout of 58 countries for 2010 (Israel was ranked 24th in 2009) CONTINUE Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2010

  25. #1 Israel is at: #2 Israel is at: IMD World Competitiveness Yearbook 2010 • Resilience of the economy to economic cycles • Youth unemployment • Central Bank policy • Finance skills • Skilled labor • Entrepreneurship of managers • Public and private sector ventures • Flexibility and adaptability of people • Innovative capacity • Scientific research (public and private) • Total expenditure on R&D • Business expenditure on R&D CONTINUE Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2010

  26. #3 Israel is at: #4 Israel is at: IMD World Competitiveness Yearbook 2010 • Capital markets (foreign and domestic) • Adaptability of government • Venture capital • Pension funding CONTINUE Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2010

  27. WEF Global Competitiveness Index 2009-2010 The World Economic Forum ranked Israel27thout of 134 countriesfor 2009-2010 CONTINUE Source: World Economic Forum, Global Competitiveness Index, 2009-2010

  28. Utility Patents Quality of Scientific Research Institutions Company spending on R&D Strength of Investor Protection WEF Global Competitiveness Index 2009-2010 CONTINUE Source: World Economic Forum, Global Competitiveness Index, 2009-2010

  29. Capacity for Innovation Availability of Latest Technologies Personal Computers Venture Capital Availability WEF Global Competitiveness Index 2009-2010 CONTINUE Source: World Economic Forum, Global Competitiveness Index, 2009-2010

  30. Central Bank Interest Rates: Israel and U.S.A 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 1.5% Bank of Israel Rate (BOI) U.S. Federal Funds Rate CONTINUE Source: Bank of Israel (BOI), Federal Reserve

  31. NASDAQ & Tel Aviv 100 (monthly average) Tel Aviv 100 corresponds with the NASDAQ to current events NEXT CHAPTER: ISRAEL AND THE OECD BACK TO CONTENTS Source: Ministry of Finance

  32. Israel and the OECD Israel has been invited as a full member in the OECD on May 10th, 2010, and officially joined in May 27th, 2010. See more: article in our latest Economic Highlights newsletter Expenditure on R&D Real GDP Growth GDP per Capita Unemployment BACK TO CONTENTS

  33. Expenditure on R&D(selected countries, as percentage of GDP, 2008) 4.864% Israel is ranked1st of all OECD countries by expenditure on R&D (research & development) as percentage of GDP (4.864 %), demonstrating innovation, development and creativity. CONTINUE Source: OECD

  34. Real GDP Growth(selected countries, annual percentage of change, 2009) While many OECD countries were severely affected by the global economic crisis, Israel experienced only a relatively mild decline in its growth rate. For Israel’s year-on-year graph, see slide no.7 0.7% CONTINUE Source: OECD

  35. GDP per capita (selected countries, current prices in US$, current PPP’s, 2008) Israel stands just a little below the Total OECD Average For Israel’s adjusted PPP GDP Per Capita, see slide no.4 33,739.9* 27,901.8 CONTINUE * Estimated Source: OECD

  36. Unemployment Rate(2009, harmonized) Israel stood below the Total OECD Average Israel’s unemployment grew mildly compared with some OECD members during 2009, with the global economic crisis in background. 8.3%* 7.6% * Estimated NEXT CHAPTER: INTERNATIONAL TREATIES BACK TO CONTENTS Source: Ministry of Finance, OECD

  37. International treaties Israel’s Free Trade Agreements Avoidance of Double Taxation Agreements Cooperation in Industrial R&D Agreements Protection of Investments Agreements International Organization Memberships BACK TO CONTENTS

  38. Israel’s Free Trade Agreements 1985 USA QIZ Agreements Egypt (2004) Jordan (1998) 1992 EFTA 1997 Turkey 1997 Canada 1999 Mexico 2000 European Union (Association Agreement) 2007 MERCOSUR (Argentina, Brazil, Paraguay & Uruguay, not yet in force) CONTINUE Source: Ministry of Finance

  39. Austria Croatia Hungary Belarus Denmark India Belgium Estonia Ireland Brazil Ethiopia Italy Bulgaria Finland Jamaica Canada France Japan China Germany Latvia Czech Republic Greece Lithuania Avoidance of Double Taxation Agreements CONTINUE Source: Ministry of Finance

  40. Luxembourg Russia Switzerland Mexico Singapore Thailand Moldova Slovakia Netherlands Norway Slovenia Turkey Philippines South Africa Ukraine Portugal South Korea United kingdom Poland Spain Uzbekistan Romania Sweden U.S.A Vietnam Taiwan Avoidance of Double Taxation Agreements CONTINUE Source: Ministry of Finance

  41. Austria India Sweden Belgium Ireland United kingdom Canada Italy U.S.A China Korea Victoria(Australia) Finland Netherlands Czech Republic France Portugal Germany Singapore Hong Kong Spain Cooperation in Industrial R&D Agreements CONTINUE Source: Ministry of Finance

  42. Albania Cyprus India Argentina Czech Republic Kazakhstan Armenia El Salvador Latvia Azerbaijan Estonia Lithuania Belarus Ethiopia Moldova Bulgaria Georgia Mongolia China Guatemala Poland Croatia Germany Romania Protection of Investment Agreements CONTINUE Source: Ministry of Finance

  43. Serbia Ukraine Slovakia Uruguay Slovenia Uzbekistan South Africa * South Korea Thailand Turkey Turkmenistan Protection of Investment Agreements CONTINUE *pending ratification Source: Ministry of Finance

  44. Main International Economic Organizations Membership: • Israel is a member in leading international • economic organizations: • WBG • IMF • WTO • OECD A more detailed list: BIS | BSEC (observer) | CE (observer) | CERN (observer) | EBRD | FAO | IADB | IAEA | WBG – IBRD, IFC, IDA, MIGA | ICAO | ICC | ICCT (signatory) | ICFTU | IFAD | IFRCS (observer) | ILO | IMF | IMO | Interpol | IOC | IOM | ISO | ITU | OAS (observer) | OECD (candidate) | OPCW (signatory) OSCE (partner) | PCA | UN | UNCTAD | UNECE | UNEP | UNESCO | UNHCR | UNIDO | UPU | WCO | WFP | WHO | WIPO | WMO | WTOO | WTRO | WTO | ICSID NEXT CHAPTER: RELEVANT SITES BACK TO CONTENTS Source: Ministry of Finance

  45. Relevant Sites Ministry of Finance International Affairs Website www.financeisrael.mof.gov.il Israeli Government Institutions Ministry of Finance OECD Profile on Israel Bank of Israel (BOI) Central Bureau of Statistics Israeli Government Portal Israel Securities Authority Ministry of Industry, Trade and Labor CONTACT US BACK TO CONTENTS

  46. WE WELCOME YOUR FEEDBACK Mr. Roni Hershkovitz Director Overseas Economic Information International Affairs Department Ministry of Finance Jerusalem Israel Follow us on Twitter Subscribe to our RSS Feeds Subscribe to our Newsletters Mr. Assaf Luxembourg Overseas Economic Information International Affairs Department Ministry of Finance Jerusalem Israel Write us an Email Visit our Website START OVER

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