economic highlights - Israel Trade Commission, Sydney, Australia

STATE OF ISRAEL 

MINISTRY OF FINANCE 

INTERNATIONAL AFFAIRS DEPARTMENT 

ECONOMIC HIGHLIGHTS 

2 nd Quarter 2010 

Click to start

Contents 

Economic Figures 

Balances 

International Comparisons 

Israel and the OECD 

International Treaties 

Relevant Sites 

Note: 

You can return to the beginning 

of each chapter by clicking the 

emblem of Israel on the top of 

each slide. 

Contact Us

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


Criteria 

2008 

2009 

2009 

Q2 

2009 

Q3 

2009 

Q4 

2010 

Q1 

GDP 

(current prices in $B)* 

181.7 

182.9 

45.3 

45.7 

46.2 

46.6 

Real GDP Growth Rate 

(%) 

4.0% 

0.7% 

1.2% 

3.6% 

4.8% 

3.3% 

GDP per Capita 

(PPP adjusted)** 

27,143$ 

None yet 

-- 

-- 

-- 

-- 

GDP per Capita Growth Rate 

(%, 2005 prices) 

2.2% 

-1.5% 

-0.4% 

1.7% 

2.7% 

1.4% 

Exports (Goods & Services)** $B* 

(As Percentage of GDP) 

82.0 

(45.1%) 

72.6 

(39.7%) 

17.3 

(38.2%) 

17.9 

(39.3%) 

19.8 

(42.8%) 

19.4 

(41.7%) 

Imports (Goods & Services)** $B* 

(As Percentage of GDP) 

80.0 

(44.0%) 

68.8 

(37.6%) 

16.8 

(37.0%) 

17.3 

(38.0%) 

17.9 

(38.8%) 

19.6 

(42.1%) 

Unemployment Rate 

(%) 

6.1% 

7.6% 

7.9% 

7.7% 

7.3% 

7.2% 

*Using a public exchange rate of 1$ = 3.82NIS 

** In current prices 

CONTINUE 

Source: Ministry of Finance, IMF


Criteria 

2006 

2007 

2008 

2009 

Total Gross Debt 

(% of GDP) 

84.5% 

78.3% 

77.2% 

79.6% 

Government Expenditure 

(Percentage of GDP) 

44.8% 

44.0% 

42.9% 

42.7% 

Current Account Surplus 

(% of GDP) 

5.1% 

2.9% 

0.7% 

3.8% 


(CPI, yearly average) 

2.1% 

0.5% 

4.6% 

3.3% 

CONTINUE 

Source: Ministry of Finance


Rating Firm 

Term 

Domestic Bonds 

Rating 

Forecast 

Overseas Bonds 

Rating 

Moody's 

Long 

Short 

A1 

- 

Stable 

A1 

P1 

Standard & Poor's 

Long 

Short 

AA- 

A-1+ 

Stable 

A 

A-1 

Fitch 

Long 

Short 

A+ 

- 

Stable 

A 

F1 

Moody's / S&P & Fitch 

All 3 rating firms have reaffirmed Israel’s rating, without any downgrade, 

during the global economic crisis in 2009. 

A2/A 

Baa1/BBB+ 

Baa2/BBB 

Aa3/AA- 

A1/A+ 

A3/A- 

Baa3/BBB- 

Moody's S&P Fitch 

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

CONTINUE 


GDP and Business GDP 

Annual rate of change (%), in Constant Prices 

8% 

7% 

6.0% 

6.4% 

6% 

5% 

4% 

5.1% 

5.3% 

5.2% 

5.6% 

4.0% 

4.5% 

3.6% 

3.1% 

4.8% 

5.0% 

3.3% 

4.8% 

3% 

2% 

1% 

0.7% 

1.2% 

1.2% 

0% 

-1% 

-2% 

-3% 

-4% 

-5% 

2005 2006 2007 2008 2009 2009 Q2 2009 Q3 2009 Q4 2010 Q1 

In recent years, prior to the global economic 

crisis, the Israeli economy experienced high 

growth rates 

-0.2% 

Since Q2 2009, Israel is experiencing 

constant growth, indicating a fast 

recovery from the global economic crisis 

-6% 

GDP 

Business GDP 

CONTINUE 

Source: Ministry of Finance.

GDP Growth 

Israel compared to Advanced Economies* 

(Annual rate of change (%), in constant prices) 

5.6% 

5.0% 

5.10% 

5.3% 

5.2% 

4.6% 

4.0% 

3.6% 

3.2% 

3.1% 

2.6% 

2.0% 

2.50% 

2.6% 

1.6% 

0.5% 

1.5% 

1.0% 

0.7% 

-0.5% 

-1.5% 

-2.5% 

2003 2004 2005 2006 2007 2008 2009 

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 

-3.5% 

Advanced Economies * 

Israel Growth 

-3.20% 

•Weighted average: US – 39%, Euro area – 46.5%, Japan – 3%, UK – 5%, Asian Newly Industrialized countries – 6.5% 

•Source: Ministry of Finance. 

CONTINUE

Major GDP Components 

(Annual rate of change (%), in constant prices) 

16 

11.3 

15.0 

Global Economic Crisis 

11 

6 

3.3 

1.8 

4.1 

4.2 

4.3 

3 

6 

6.7 

3.4 

8.5 

3.6 

1.9 

4.4 

5.2 

1.5 

1.6 

1 

2005 2006 2007 2008 2009 

-4 

-9 

-14 

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. 

-6 

-12.1 

Private Consumption Government Consumption Investment in Fixed Assets Exports of Goods and Services 

CONTINUE 


Exports of Goods and 

Services ($B) 

90 

80 

Global 

Economic 

Crisis 

70 

24.1 

60 

50 

40 

30 

20 

10 

11.9 

27.5 

13.4 

30.2 

16 

36.7 

17.4 

39.8 

19.2 

43.3 

21.1 

50.3 

57.2 

21.8 

45.8 

0 

2002 2003 2004 2005 2006 2007 2008 2009 

Goods 

Services 

*Using a public exchange rate of 1$ = 3.82NIS 

** In current prices 

CONTINUE 


Belgium 

France 

Israel’s Main Trading Partners 

(US$ Billions, excluding diamonds) 

16 

14 

12 

10 

5.8 

Imports 

2008 

2009 

In 2009, China became a relatively bigger 

trading partner for Israel 

40 

8 

35 

Exports 

6 

3.5 

3.4 3.3 2.6 

30 

25 

16.7 

2008 

2009 

4 

2 

8 

4.2 3.9 4 4.3 

2.1 1.9 1.9 

1.5 

1.4 

2.6 2.5 2.5 2.2 1.9 

20 

0 

USA 

China* 

Italy 

UK 

Japan 

Germany 

Switzerland 

Belgium 

Netherlands 

15 

10 

20.0 

5 

0 

2.9 2.4 

4.1 4.6 

1.8 1.5 1.4 1.4 

1.1 1.1 1.1 

2.4 2.0 2.0 1.9 1.3 1.7 1.6 

USA 

China* 

India 

UK 

France 

Italy 

Turkey 

Netherlands 

Germany 

*Since July 1997 the data on trade with Hong-Kong is added to the data on China 

CONTINUE 

Source: Central Bureau of Statistics

Net Foreign Investments in Israel 

(In $ Billion) 

18 

16.9 

16 

Direct Investments 

14.8 

13.8 

Global Economic Crisis 

14 

Total Investments 

12 

10 

9.5 

8.3 

9 

9.6 

7.8 

9.9 

8 

6 

4 

3.3 

4.3 

2.4 

4.3 

3.8 

2 

0 

2003 2004 2005 2006 2007 2008 2009 

CONTINUE 


Unemployment and Participation 

(As % of Total Labor Force) 

8.5% 

8.0% 

56.4% 

56.4% 

56.6% 

56.7% 

56.5% 

56.6% 

56.6% 

56.3% 

57.0% 

56.5% 

7.5% 

7.6% 

7.9% 7.7% 

7.0% 

7.40% 

7.20% 

56.0% 

6.5% 

6.5% 

55.5% 

6.0% 

As Israel grows out of the global 

5.5% 

5.9% 

6.0% 


recession, unemployment is decreasing 

55.0% 

5.0% 

Participation in the Labor Force 

Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2010 Q1 

54.5% 

CONTINUE 



(Rate of Change in CPI, yearly average) 

7% 

6% 

5.70% 

5% 

4.60% 

4% 

3.30% 

3% 

2.10% 

2% 

1.30% 

1% 

0.70% 

0.50% 

0% 

-1% 

2002 2003 2004 2005 2006 2007 2008 2009 

-0.40% 

* July 2009 index compared to July 2008 

CONTINUE 

Source: Central Bureau of Statistics, Ministry of Finance

Inflation Rate Worldwide 

(Annual rate of change in CPI) 

7% 

2008 (left column) 

The Israeli economy demonstrated a high level of stability 

compared to other countries throughout the global economic crisis 

5% 

4.6% 

2009 (right column) 

3.8% 

3.8% 3.9% 

4.4% 

3% 

3.30% 

2.4% 

2.7% 

2.16% 

3.1% 

2.8% 

1.4% 

2% 

1% 

0.07% 

-1% 

Israel 

Japan 

-1.37% 

Switzerland 

-0.44% 

Portugal 

-0.90% 

Norway 

USA 

-0.32% 

Finland 

Ireland 

-1.70% 

Germany 

Belgium 

-0.20% 

-3% 

CONTINUE 

Sources: Ministry of Finance, IMF

Growth of Main GDP 

Components for Previous Year 

Criteria 

2009 

Real GDP 

+ 0.7% 

Business GDP 

- 0.2% 

Exports 

- 12.1% 

Private Consumption 

+ 1.5% 

Public Consumption 

+ 1.6% 

Investment in Fixed Assets 

- 6.0% 

NEXT CHAPTER: BALANCES 

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Balances 

Gross Public Debt 

Budget Deficit – Target and Execution 

Budget Deficit and General Government Expenditure 

Current Account and Net Foreign Debt 

Gross Tax Burden 

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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 

105% 

99.0% 

100% 

97.4% 

95% 

93.8% 

90% 

85% 

84.5% 

Global 

Economic 

Crisis 

80% 

78.3% 

77.2% 

79.9% 

75% 

2003 2004 2005 2006 2007 2008 2009 

CONTINUE 


Budget Deficit – Target and Execution 

10000 

5,206 

0 

-869 

-3,058 

-5,273 

-4,452 

-10000 

-20000 

-16,460 

-15,180 

-11,450 

-13,501 

-16,061 

-30000 

For the first time in its history, Israel 

enacted a biennial budget for the 

years 2009-2010 

-40000 

Quarterly Budget Execution 

Yearly Budget Execution 

In 2009 Israel came in under budget 

target. 

-39,286 

Yearly Budget Target 

-44,355 

-50000 

2008 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Total 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Total 

CONTINUE 


Budget Deficit and 

General Government Expenditure 

2009 

5.20% 

Budget Deficit 

(% of GDP) 

2008 

2.20% 

2007 

0.00% 

2006 

0.90% 

2005 

1.80% 

42.70% 2009 

2004 

3.50% 

42.90% 

2008 

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 

44.00% 

2007 

44.80% 

2006 

45.40% 

2005 

General Government 

Expenditure (% of GDP) 

47.40% 

48.00% 47.00% 46.00% 45.00% 44.00% 43.00% 42.00% 41.00% 40.00% 

2004 

CONTINUE 


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 

0% 

2003 2004 2005 2006 2007 2008 2009 

-5% 

-1.8% 

-4.6% 

Current Account Surplus 

(% of GDP) 

-10% 

-15% 

-11.3% 

-15.2% 

-20% 

5.0% 

4.0% 

2.3% 3.1% 

5.1% 

2.9% 

3.8% 

-25% 

-30% 

-24.6% -24.8% 

-28.0% 

3.0% 

1.2% 

Net Foreign Debt 

2.0% 

(% of GDP) 

1.0% 

0.7% 

0.0% 

2003 2004 2005 2006 2007 2008 2009 

-1.0% 

CONTINUE 

Source: Ministry of Finance.

Gross Tax Burden 

(as % of GDP) 

35.5% 

35.6% 

35.9% 36.4% 

33.8% 

31.4% 

2004 2005 2006 2007 2008 2009 

OECD countries average: 35.8% (2007 average) 

OECD countries average: 35.2% (2008 average estimated by OECD) 

NEXT CHAPTER: INTERNATIONAL COMPARISONS 


Source: Ministry of Finance, OECD

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) 

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IMD World Competitiveness 

Yearbook 2010 

The Institute for Management 

Development ranked Israel 

17 th 

out of 58 countries for 2010 

(Israel was ranked 24 th in 2009) 

CONTINUE 

Source: International Institute for Management and Development (IMD), World Competitiveness Yearbook 2010


Yearbook 2010 

Israel is at: 


Resilience of the economy to economic cycles 

Central Bank policy 

Skilled labor 

Public and private sector ventures 

Innovative capacity 

Youth unemployment 

Finance skills 

Entrepreneurship of managers 

Flexibility and adaptability of people 

Scientific research (public and private) 

Total expenditure on R&D 

Business expenditure on R&D 

CONTINUE 



Yearbook 2010 



Capital markets (foreign and domestic) 

Venture capital 

Adaptability of government 

Pension funding 

CONTINUE 


WEF Global Competitiveness 

Index 2009-2010 

The World Economic Forum 

ranked Israel 

27 th 

out of 134 countries 

for 2009-2010 

CONTINUE 

Source: World Economic Forum, Global Competitiveness Index, 2009-2010


Index 2009-2010 

Utility Patents 

Quality of Scientific Research Institutions 

Company spending on R&D 

Strength of Investor Protection 

CONTINUE 



Index 2009-2010 

Capacity for Innovation 

Availability of Latest Technologies 

Personal Computers 

Venture Capital Availability 

CONTINUE 


Central Bank Interest Rates: 

Israel and U.S.A 

6% 

5% 

4% 

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% 

3% 

2% 

1% 

Bank of Israel Rate (BOI) 

U.S. Federal Funds Rate 

0.50% 

0.75% 

1% 

1.25% 

1.50% 

1.50% 

0% 

-1% 

7 

8 

9 

10 

11 

12 

2008 1 

9 

10 

11 

12 

2009 1 

9 

10 

11 

12 

2010 1 

2 

3 

4 

5 

6 

7 

8 

2 

3 

4 

5 

6 

7 

8 

2 

3 

4 

5 

6 

CONTINUE 

Source: Bank of Israel (BOI), Federal Reserve

NASDAQ & Tel Aviv 100 

(monthly average) 

4,000.00 

3,500.00 

Nasdaq (left scale) 

Tel Aviv 100 (right scale) 

1200.00 

1100.00 

1000.00 

3,000.00 

900.00 

800.00 

2,500.00 

700.00 

2,000.00 

600.00 

500.00 

1,500.00 

Tel Aviv 100 corresponds with the 

NASDAQ to current events 

400.00 

300.00 

1,000.00 

Jan 2006 

2 

3 

4 

5 

6 

Jul 2006 

8 

9101112 

Jan 2007 

2 

3 

4 

5 

6 

July 2007 

8 

9101112 

Jan 2008 

2 

3 

4 

5 

6 

July 2008 

8 

9101112 

Jan 2009 

2 

3 

4 

5 

6 

July 2009 

8 

9101112 

Jan 2010 

2 

3 

4 

5 

6 

200.00 

NEXT CHAPTER: ISRAEL AND THE OECD 



Israel and the OECD 

Israel has been invited as a full member in the OECD on May 10 th , 2010, and 

officially joined in May 27 th , 2010. 

See more: 

article in our latest Economic Highlights newsletter 

Expenditure on R&D 

Real GDP Growth 

GDP per Capita 

Unemployment 

BACK TO CONTENTS

Expenditure on R&D 

(selected countries, as percentage of GDP, 2008) 

4.864% 

Israel is ranked 1 st of all OECD countries by expenditure on R&D (research & development) 

as percentage of GDP (4.864 %), demonstrating innovation, development and creativity. 

Source: OECD 

CONTINUE

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% 

Source: OECD 

CONTINUE

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 

* Estimated CONTINUE 

Source: OECD


(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 

Source: Ministry of Finance, OECD 

NEXT CHAPTER: INTERNATIONAL TREATIES 

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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 

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Israel’s Free Trade Agreements 

1985 

1992 

USA 

EFTA 

QIZ Agreements 

1997 

Turkey 

Egypt (2004) 

1997 

1999 

Canada 

Mexico 

Jordan (1998) 

2000 

European Union (Association Agreement) 

2007 

MERCOSUR (Argentina, Brazil, Paraguay & Uruguay, not yet in force) 

CONTINUE 


Avoidance of Double 

Taxation Agreements 

Austria 

Belarus 

Belgium 

Brazil 

Bulgaria 

Canada 

China 

Czech Republic 

Croatia 

Denmark 

Estonia 

Ethiopia 

Finland 

France 

Germany 

Greece 

Hungary 

India 

Ireland 

Italy 

Jamaica 

Japan 

Latvia 

Lithuania 

CONTINUE 


Avoidance of Double 

Taxation Agreements 

Luxembourg 

Mexico 

Moldova 

NorwayN o r w a y 

Philippines 

Portugal 

Poland 

Romania 

Russia 

Singapore 

Slovakia 

Slovenia 

South Africa 

South Korea 

Spain 

Sweden 

Switzerland 

Thailand 

Netherlands 

Turkey 

Ukraine 

United kingdom 

Uzbekistan 

U.S.A 

Vietnam 

Taiwan 

CONTINUE 


Cooperation in Industrial R&D 

Agreements 

Austria 

Belgium 

Canada 

China 

Finland 

France 

Germany 

Hong Kong 

India 

Ireland 

Italy 

Korea 

Netherlands 

Portugal 

Singapore 

Spain 

Sweden 

United kingdom 

U.S.A 

Victoria (Australia) 


CONTINUE 


Protection of Investment 

Agreements 

Albania 

Argentina 

Armenia 

Azerbaijan 

Belarus 

Bulgaria 

China 

Croatia 

Cyprus 


El Salvador 

Estonia 

Ethiopia 

Georgia 

Guatemala 

Germany 

India 

Kazakhstan 

Latvia 

Lithuania 

Moldova 

Mongolia 

Poland 

Romania 

CONTINUE 


Protection of Investment 

Agreements 

Serbia 

Slovakia 

Slovenia 

Ukraine 

Uruguay 

Uzbekistan 

South Africa * 

South Korea 

Thailand 

Turkey 

Turkmenistan 

*pending ratification 

CONTINUE 


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 



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 

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Director 

Overseas Economic Information 

International Affairs Department 


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Overseas Economic Information 

International Affairs Department 


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