September 2011 The Israeli Economy. GDP ($Billion) 218 Population (7/2011, Million) 7.8 GDP per capita ($) 28,575 Foreign Trade (% of GDP) 74% Total Exports.

September 2011

The Israeli Economy

• GDP ($Billion) 218• Population (7/2011, Million) 7.8 • GDP per capita ($) 28,575• Foreign Trade (% of GDP) 74% • Total Exports (% of GDP) 37%• Unemployment (Q2/2011) 5.5%

The Israeli Industry

• Share of business sector 21% • Industrial Sales ($Billion) 95• Industrial Exports (% of sales) 43% • Employees 350K• Main branches: Chemicals, Electronics & Food2

The Israeli Economy – 2010 Facts & Figures

The Manufacturers' Association of Israel

Israeli Economy

Strengths

The Manufacturers' Association of Israel

3

Rapid Growth in Israeli Economy

4

The Manufacturers' Association of Israel * M.A.I Economic Research Department early estimates.

GDP GDP per Capita Business Sector GDP

4.0%

2.2%

4.5%

0.8%

-0.9%

0.3%

4.8%

2.9%

5.8%

4.5%

2.6%

5%

2011 Est.*

The Israeli EconomyReal Annual Changes

Export Oriented Growth

5

The Manufacturers' Association of Israel

7%

41%34% 27% 31%

54%62%

80%

102%

120%

102%

134% 145%

0%

1%

12%

6%

4% 4%11%

15%

26%32%

42%

33%

44% 46%

Jan.-June '11

Industrial Exports

Industrial Production

Export = 43% of Sales

Export Oriented Growth in IndustryReal Cumulative Rate of Change, Since 1998

Export = 31% of Sales

To Industrial Output To Employment in Industry

To Industrial Export

71%65%

75%

The High Tech Sector Contribution to Industrial Growth in 2004-20

As Percentage of Total Growth

The High Tech Sector Contribution to Industrial Growth

The Manufacturers' Association of Israel 6

2004 – Q2/2011

Including 8/2011))

A Continuous Decrease in Unemployment Rate

7

10.3% 10.7% 10.4%

9.0%8.4%

7.3%

6.1%

7.5%6.6%

5.6%

2011 Frcst.

Unemployment RateAs Percent of Civilian Labor Force

The Manufacturers' Association of Israel * M.A.I Economic Research Department early estimates.

Reducing Direct TaxesTax Reform Path

8

The Manufacturers' Association of Israel

45%

25%

45%

24%

45%

24%

44%

23%

43%

22%

42%

21%

41%

20%

39%

18%

Marginal Income Tax Corporate Tax

World Leadership in Civilian R&D Investments

Source: Israeli CBS The Manufacturers' Association of Israel

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4.5%4.0%

3.5%

3.0% 3.0%

2.1%2.0%2.0%

1.5%

1.0%

Israel is The World Leader in Civilian R&D InvestmentAs Percentage of GDP, 20 9

2010

4.

4%

Global R&D and Innovation Center

10

The Manufacturers' Association of Israel

High Share of ICT in the Business Sector

ICT= Information & Communications Technologies, 2006

Source: Israeli CBS The Manufacturers' Association of

Israel

11

15.9 14.8

13.7

12.1

10.9 10.8 10.7

9.2 8.7 8.4 8.3 7.9 7.9 7.9 7.6 7.6 7.5 7.5 7.1 7.1 6.9 6.8 6.7

5.0

ICT Sector GDP, Out of The Business Sector GDP 2006

2010

15.7

%

Other Asia US EU

23%

15%

28%

34%

23%

18%

26%

32%

Jan. - Jul. 2011

Distribution of export according to areas

Diversion of Trade to Asian Countries

The Manufacturers' Association of Israel 12

6%

5.5%

3%

2%

5.2%

3.7%

Target Deficit Actual Deficit

As percent of GDP

Responsible Fiscal PolicyRestrained Government Budgetary Deficit

The Manufacturers' Association of Israel

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Source: Ministry of Finance

Relatively Low Government Deficit in Israel

Source: Eurostat, IMF, MOF

The Manufacturers' Association of Israel 14

32.4%

10.6% 10.5% 10.4% 9.5% 9.2% 9.1%7.0%

5.4%4.6% 4.1% 3.7% 3.3% 2.7% 2.5%

0.0%

Israel’s Government Deficit is Relatively LowAs Percent of GDP, 2010

Relatively Low Public Debt Ratio

The Manufacturers' Association of Israel

Source: Ministry of Finance, Eurostat, IMF

15

220.3%

142.8%

119.0%

96.8% 96.2% 93.0% 91.6%83.2% 81.7% 80.0% 76.6% 72.3%

62.7% 60.1% 55.0% 48.4% 43.6% 39.8%

As percent of GDP, 2010

Israeli Economy

Weaknesses

The Manufacturers' Association of Israel

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The Manufacturers' Association of Israel

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Gini Index in the OECD

Source: OECD

0.232

0.312

0.379

0.474

Den

mar

kSw

eden

Luxe

mbo

urg

Aust

riaSl

ovak

iaCz

ech

Repu

blic

Finl

and

Belg

ium

Net

herla

nds

Nor

way

Switz

erla

ndIc

elan

dFr

ance

Hun

gary

Ger

man

yAu

stra

liaO

ECD

Kore

aCa

nada

Spai

nG

reec

eJa

pan

Irel

and

New

Zea

land U

KIt

aly

Pola

ndIs

rael

USA

Port

ugal

Turk

eyM

exic

o

Gini index in the OECD

Isra

el

Standard of LivingRelatively Low GDP Per Capita

18

The Manufacturers' Association of Israel

44

84

100

138

164

Gross domestic product per capita Index (OECD=100), Based on PPP, 2010

Cost of LivingNumber of Salaries Required to Buy…

19

The Manufacturers' Association of Israel

Source: BDO, Ziv Hatf, According to an average salary.

114

9079 71

60 56 54

30

To Buy an Apartment To Buy a Car*

* Mazda 3

14.2

11.6

9

5.9 5.4 5.4 5.34.1 3.8

46.3%

60.2%

64.6%

78.9%

Employment RateAs percentage of working age popualtion, 2010

Relatively Low Employment Rate

20

The Manufacturers' Association of Israel Source: OECD

Israeli Economy 2012 Forecast

21

The Manufacturers' Association of Israel

* M.A.I Economic Research Department early estimates.** Bank of Israel Forecast. Aug. 2011.

2011 Est.* 2012 Frcst.**

4.0%

0.8%

4.8%4.5%

3.9%

The Israeli EconomyReal Annual Changes

Real Annual Changes in GDP

http://www.industry.org.il/Eng/

The Manufacturers' Association of Israel

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