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ECONOMIC HIGHLIGHTS 2 nd QUARTER 2008 STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT July 2008 International Affairs Department International.

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Presentation on theme: "ECONOMIC HIGHLIGHTS 2 nd QUARTER 2008 STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT July 2008 International Affairs Department International."— Presentation transcript:

1 ECONOMIC HIGHLIGHTS 2 nd QUARTER 2008 STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT July 2008 International Affairs Department International Affairs Department

2 Contents Note: You can return to the beginning of each chapter by clicking these symbols on the top of each slide. Economic Figures Economic Figures Balances International Comparisons International Comparisons Israel and the OECD Israel and the OECD International Treaties International Treaties Relevant Sites Relevant Sites Main Characteristics Main Characteristics Israel celebrating 60 Israel celebrating 60

3 Israels Economy: Highly Educated Population. Rapid Development of Technology & High-Tech Industries. Entrepreneurial Culture. Open Economy. High Trade intensity. Main Characteristics

4 Israel Celebrating 60 GDP Per Capita Tourist Arrivals and Departures of Israelis abroad Public Debt Students in Higher Education Institution Investment in the total knowledge: Higher Education, Software and R&D Press for desired slide or continue: Back to Contents Population of Israel5 6 7 8 9 10

5 Population of Israel * 1949 - 2007 Israels Current Population: 7,282,000 5 *End of Year. Source: Central Bureau of Statistics, Ministry of Finance

6 GDP Per Capita * 1950 -2007 The resources available to Israel in 2007 - from local production and imports – are 38 times greater than they were in 1950. *(Constant Prices of 2005) Source: Central Bureau of Statistics 6

7 Public Debt (% of GDP) 1950 - 2007 Since 1984, The Public Debt has shown a downward trend 7

8 Tourist Arrivals and Departures of Israelis abroad (1950 – 2007) During the 1950s, an annual average of 47,000 visitors entered Israel. 1.5 Million tourist entries have been registered in the first half of 2008. Source: Central Bureau of Statistics 8

9 Students in Higher Education Institutions (1948 /49 – 2007 /08) In 1948, 208 students received an academic degree in Israel. In 2006 – almost 53,000. Source: Central Bureau of Statistics 9

10 Investment in total knowledge: Higher Education, Software and R&D (% of GDP, 2002) Israel is the world leader in the amount of venture capital invested in high- tech industries, relative to GDP. Source: Central Bureau of Statistics 10

11 Economic Figures GDP and GDP per Capita Major GDP Components Growth: Israel compared to the World Exports of Goods and Services Exports of Goods by Region Imports of Goods and Services Imports of goods by Region Foreign Investments Unemployment & Participation Rates Inflation Rate Estimates for 2008 Press for desired slide or continue: Back to Contents Main Indicators and Forecast12-13 14 15 16 17 18 19 20 22 23 24 26 Main Trading Partners21 Inflation Rate Worldwide 25

12 *Using public exchange rate. *** Source: OECD. ** In current prices Main Economic Indicators and Forecast 20072006200520042003Criteria 161.9142.3131.2123.6116GDP (current prices in $B)* 5.3%5.2%5.3%5.2.%2.3%GDP Real Growth Rate (%) $25,762$28,169$26,476 GDP per Capita (PPP adjusted)*** 3.4% 3.5%3.4%0.4% GDP per Capita Growth Rate (%, Current prices) 71.5 (44.2%) 62.9 (44.2%) 57.6 (43.9%) 52.7 (42.6%) 43.6 (37.6%) Exports (Goods & Services)** $B* (As Percentage of GDP) 73.6 (45.5%) 62.0 (43.6%) 57.6 (43.9%) 52.3 (42.3%) 44.5 (38.4%) Imports (Goods & Services)** $B* (As Percentage of GDP) 7.3%8.4%9.0%10.4%10.7%Unemployment Rate (%) 12

13 20072006200520042003Criteria 80.8%86.7%95.9%99.9%101.7%Total Gross Debt (Percentage of GDP) 45.1%45.6%46.3%48.1%51.2% Government Expenditure (Percentage of GDP) 3.2%6.0%3.3%2.4%1.2%Current Account (% of GDP) 3.4%-0.1%2.4%1.2%-1.9%Inflation Rate ( CPI, end of year) Fitch: A (Stable) S&P: A (Positive) Moodys: A1 (Stable) Credit Rating ( Long-term Foreign Bonds ) About Credit Rating: The governments credit rating affects banks, companies and financial bodies in the market. The rating creates a ceiling which acts as a reference to their bond pricing. Credit rating indicates the macro-economic status of an economy and affects foreign investors decisions whether to invest in the market. Recently Moody s Ratings have raised Israel s foreign currency credit rating from A2 to A1 and local currency credit rating from A2 to A1 (Both: Stable). Source: Ministry of Finance, Central Bureau of Statistics Main Economic Indicators and Forecast (con.) 13

14 Source: Central Bureau of Statistics, Ministry of Finance GDP and GDP per Capita (Annual rate of change (%), in Constant Prices) Growth forecasts for 2008 : 4.2% 14

15 GDP Growth Israel compared to Advanced Economies* (Annual rate of change (%), in constant prices) * (Weighted average: US - 44%, Euro area - 37%, Japan - 4%, UK - 8%, Asian Newly Industrialized countries - 7%) Source: Ministry of Finance, Israel. Since 2003, Israels growth rate has exceeded the average growth rate of advanced economies 15

16 Major GDP Components (Annual rate of change (%), in constant prices) Source: Central Bureau of Statistics, Ministry of Finance 16

17 Source: Central Bureau of Statistics Exports of Goods and Services ( $B ) 17

18 Exports of Goods by Region (Excluding diamonds) Source: Central Bureau of Statistics *Rest of Europe Includes E.F.T.A. Countries (Norway, Switzerland, Liechtenstein and Iceland) 2006 2007 (USA: 31.2%) 18 (USA: 28%)

19 Imports of Goods and Services (B$) Source: Central Bureau of Statistics, Ministry of Finance 30% growth in vehicle imports in 2007 19

20 Imports of Goods by Region (excluding Diamonds) Source: Central Bureau of Statistics *Rest of Europe Includes E.F.T.A. Countries (Norway, Switzerland, Liechtenstein and Iceland) (USA: 13.4) (USA: 14.9%) 2006 2007 20

21 16.6 5.5 4.4 3.7 3.5 3.4 2.82.72.4 2.3 Israels Main Trading Partners (US$ Billions, excluding diamonds) Source: Central Bureau of Statistics 2006 2007 21 EXPORT IMPORT 15.2 4.9 3.23.1 2.9 3.0 2.12.52.0

22 Foreign Investments (B$) Source: Ministry of Finance 22 In July 2008, the Norwegian pension fund Global decided to invest over half a billion euros in Israel.

23 Unemployment and Participation (As % of Total Labor Force) Source: Central Bureau of Statistics The Participation Rate in the Labor Force peaked at 56.6%. 23

24 Inflation Rate (Rate of Change in CPI, end of year) Source: Central Bureau of Statistics, Ministry of Finance After a 1.5% increase in April and 0.6% in May, CPI in June 2008 grew by 0.1%. 24

25 Inflation Rate Worldwide (Rate of Change in CPI, end of 2007) The Bank of Israel has raised its interest rate to 3.75%, facing a rising CPI in the second quarter of 2008. 25 3.4% Sources: Central Bureau of Statistics, OECD

26 Criteria + 4.2% Real GDP + 4.9% Business GDP + 6.4% Exports + 4.6% Private Consumption + 2.0% Public Consumption + 7.3% Investment in Fixed Assets Source: Ministry of Finance Growth of Main GDP Components 2008 2008 Projection 26

27 Balances Budget Deficit ; Current Account ; Net Foreign Debt General Government Expenditure Gross Public Debt Gross Tax Burden Back to Contents Press for desired slide or continue: 28 29 30 31

28 Gross Public Debt (as percentage of GDP) Source: Ministry of Finance Since 2003, the gross public debt has been on a downward trend. 28

29 Source: Ministry of Finance Budget Deficit and General Government Expenditure 29 Budget Deficit Government Expenditure Both Government expenditure and budget deficit have been decreasing since 2003 Tax revenues up by 6.7% in 2007

30 Current Account and Net Foreign Debt Source: Bank of Israel In 2003, current account turned positive, conversely with the decrease of the net foreign debt. Current Account Net Foreign Debt 30

31 Source: Ministry of Finance, OECD*As of 2005 Gross Tax Burden (as % of GDP) Tax burden has been in the vicinity of OECD average since 2003 31 - - - OECD countries average: 36.2% *

32 International comparisons and additional data Capital Raised by Israeli Venture Capitals Central Bank Interest Rates NASDAQ and Tel Aviv 100 Indices Israels Credit Rating Global Competitiveness Index Global Competitiveness Index: Selected Issues Business Competitiveness Index ; Network Readiness Index Figures from Tel Aviv Stock Exchange Press for desired slide or continue: Back to Contents 33 34 35 36 37 40 41 38

33 Capital Raised by Israeli Venture Capitals (By Vintage Year*) ICT ** product has been growing rapidly in recent years, exceeding the rate of total growth 33 Vintage year – first capital call or first investment, Including venture lending. **Information and communication technologies. Source: Israel Venture Capital (IVC)

34 Central Bank Interest Rates Israel vs. U.S.A Source: Bank of Israel (BOI), Federal Reserve 2005 200620072008 Bank of Israel Rate U.S. Federal Funds Rate 3.75% 2.0% 34

35 NASDAQ & Tel Aviv 100 (monthly average) Source: Tel Aviv Stock Exchange (TASE) and the Ministry of Finance. 35

36 Source: Credit Rating Agencies, Accountant General Israels Credit Rating 1992-2008 A1/A+ A2/A A3/A- Baa1/BBB+ Baa2/BBB Baa3 /BBB- Moody's raised Israel bond ratings to 'A1' from 'A2' 36

37 Source: World Economic Forum, Global Competitiveness Index, 2007-8 16 58 39 29 27 25 22 20 18 17 13 9 6 2 1 26 Global Competitiveness Index, 2007-2008 Countries that have been invited for open discussions for joining the OECD. Israel Ranks 17 th out of 125 Countries 37

38 Global Competitiveness Index, 2007/8 SELECTED CATEGORIES Venture Capital Availability Source: World Economic Forum, Global Competitiveness Index, 2007-8 Availability of Scientists & Engineers Quality of Scientific Research Facilities Company Spending on R&D RANK 38

39 Strength of Investor Protection Source: World Economic Forum; Global Competitiveness Index, 2007-8 Availability of Latest Technologies Utility Patents Legal Rights Index RANK Global Competitiveness Index, 2007/8 SELECTED CATEGORIES 39 (con.)

40 Countries that have been invited for open discussions for joining the OECD Source: World Economic Forum; Global Competitiveness Index (GCI), 2006; Global Information Technology Report *NRI: Measures the level of ICT (Information and Communication Technologies) development of nations [LINK TO SITE][LINK TO SITE] **GCI: Provides a holistic overview of factors critical to productivity and competitiveness [LINK TO SITE][LINK TO SITE] 5.71 (1) 5.58 (5) 5.54 (7) 5.45 (9) 5.35 (11) 5.27 (14) 5.22 (16) 5.14 (18) 5.02 (20) 4.48 (28) 4.41 (30) 4.36 (31) 3.98 (48) 3.54 (70) Network Readiness Index (NRI)* 2006-7 Business Competitiveness Index 2007-8 The business climate is a critical element of sustained economic growth 64 55 49 46 30 27 25 22 19 16 12 8 5 2 1 36 40

41 Israel and the OECD Real GDP growth in 2007-8 Unemployment Rate in 2007-8 Press for desired slide or continue: Back to Contents GDP Based on PPP per Capita in 2006 44 45 43

42 Real GDP Growth (Annual percentage of change, partial list) Source and projections: OECD and the Ministry of Finance, Israel 2.7% 1.8% 07 08 OECD has given Israel the Roadmap for accession to the organization... 07 - 5.3% 08 - 4.2% 42

43 Unemployment Rate (average) Source: OECD, Ministry of Finance Following the Roadmap, Israel has already submitted the initial memorandum 08 07 43 08 07 08 07 08 07

44 GDP per capita based on purchasing-power-parity (PPP) 2007, (in US$) 33,294 25,758 Source: Economics and Research Department calculations from OECD and the Central Bureau of Statistics data 44 18 professional Israeli teams are currently answering OECD questionnaires, designated to review Israels policy

45 International Treaties Israels Free Trade Agreements Avoidance of Double Taxation Agreements Cooperation in Industrial R&D Agreements Protection of Investments Agreements International Organization Memberships Press for desired slide or continue: Back to Contents 45-6 47 48-9 50 44

46 Israels Free Trade Agreements 46 1985 1992 1997 European Union (Association Agreement) USA EFTA Canada Turkey Mexico MERCOSUR 1999 2000 2007

47 Avoidance of Double Taxation AgreementsCroatiaDenmark Estonia * EthiopiaFinlandFranceGermanyGreeceAustriaBelarusBelgiumBrazilBulgariaCanadaChina Czech Republic HungaryIndiaIrelandItalyJamaicaJapanLatviaLithuania * The agreement with Estonia has only been signed initially 47

48 (con.)SwitzerlandThailand The Netherlands TurkeyUkraine United Kingdom UzbekistanUSALuxembourgMexicoMoldovaNorwayPhilippines Portugal * PolandRomaniaRussiaSingaporeSlovakiaSlovenia South Africa South Korea SpainSweden * The agreement with Portugal has been recently ratified Avoidance of Double Taxation Agreements 48

49 Cooperation in Industrial R&D Agreements Belgium Canada China France Hong Kong Italy Netherlands Portugal Spain UK USA Singapore Ireland Sweden Finland Germany IndiaAustria Korea 49

50 Protection of Investment Agreements AlbaniaArgentinaArmeniaBelarusBulgariaCroatiaCyprus Czech Republic El-SalvadorEstoniaGeorgiaGermanyHungaryIndiaKazakhstanKorea 50

51 TurkmenistanUkraineUruguayUzbekistan QIZ Agreement EgyptJordan LatviaLithuaniaMoldovaPolandRomaniaSlovakiaSloveniaThailandTurkey Protection of Investment Agreements (con.) 51

52 International Organization* Memberships: BIS | BSEC (observer) | CE (observer) CERN (observer) | EBRD | FAO | IADB | IAEA IBRD | ICAO | ICC | ICCT (signatory) | ICFTU IDA | IFAD | IFC | IFRCS (observer) | ILO | IMF IMO | Interpol | IOC | IOM | ISO | ITU | MIGA OAS (observer) | OECD (candidate)OPCW (signatory) OAS (observer) | OECD (candidate) | OPCW (signatory) OSCE (partner) | PCA | UN | UNCTAD | UNECE | UNEP OSCE (partner) | PCA | UN | UNCTAD | UNECE | UNEP UNESCO | UNHCR | UNIDO | UPU | WB | WCO | WFP | WHO UNESCO | UNHCR | UNIDO | UPU | WB | WCO | WFP | WHO WIPO | WMO | WTOO | WTRO | WTO WIPO | WMO | WTOO | WTRO | WTO * Economic Organizations 52

53 Relevant Sites Back to Contents Government Institutions: OECD Stat Profile on Israel Bank of IsraelBank of Israel (BOI) Central Bureau of Statistics Israeli Government Portal Ministry of Finance Israel Securities Authority Ministry of Industry, Trade and Labor OECD Israel Economic News: The Marker Globes WWW.FINANCEISRAEL.MOF.GOV.IL International Affairs Department Homepage:

54 We welcome your feedback! Contact: Ms. Ravit Friedberg International Affairs Department Ministry of Finance, Jerusalem, Israel FinanceIsrael@mof.gov.il Start Again Click here for our website! www.FINANCEISRAEL.mof.gov.il


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