Economic Highlights Presentation 1 st Quarter 2014 (As of May 1 st ) STATE OF ISRAEL MINISTRY OF FINANCE Chief Economist Department – Research, State Revenue.

Economic Highlights Presentation1st Quarter 2014(As of May 1st)

STATE OF ISRAELMINISTRY OF FINANCEChief Economist Department – Research, State Revenue & International Affairs

In any case of information derived from sources external to the Ministry of Finance, such sources are mentioned at the bottom of each item

www.financeisrael.mof.gov.il

3

4

2

5

Table of Contents

7

8

6

2

Foreign Trade and Balance of Payments

Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More

Price Stability and Monetary Policy

Table of Contents

1 Main Indicators

9 Contact

3

Economic Figures

*Using a periodic average exchange rate** For available months

Criteria201220132012 Q42013 Q12013 Q22013 Q32013 Q4

GDP(Current prices in $B)*

257.5291.566.068.273.074.975.5

Real GDP growth rate(% change)

3.4%3.3%3.5%2.0%4.5%1.8%3.2%

GDP per capita(Current $)

32,565$$36,226$8,294$8,521$9,080$9,292$9,308

GDP per capita growth rate (%, constant prices)

1.5%1.3%1.4%0.1%2.8%-0.1%1.2%

Exports (goods & services), $B*(As % of GDP)

93.136.2%

95.132.6%

23.335.2%

23.334.2%

24.733.7%

21.829.1%

25.233.3%

Imports (goods & services), $B*(As % of GDP)

92.636.0%

68.331.4%

21.933.2%

22.032.2%

22.631.0%

23.631.5%

23.230.8%

Unemployment rate**6.9%6.2%6.9%6.6%6.7%6.0%5.8%

Sources: CBS, IMF

4

Economic Figures

Criteria2007200820092010201120122013

Public debt(As % of GDP)

74.7%73.2%75.3%71.7%69.8%68.4%*

General government expenditure (As % of GDP)

42.6%41.6%41.8%41.0%40.4%40.2%40.4%

Current account surplus(As % of GDP)

3.2%1.4%3.8%3.1%1.3%0.3%2.5%

Inflation rate(CPI, yearly average, % change)

0.5%4.6%3.3%2.7%3.5%1.7%1.5%

Budget deficit (Central)(As % of GDP)

0.0%2.1%4.9%3.5%3.1%3.9%3.2%

* Data not available at time of publication

3

4

2

5

Table of Contents

7

8

6

5


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

6

GDP and Business GDPAnnual rate of change, constant prices, 2005

7

GDP GrowthIsrael compared to advanced economies, annual rate of change, constant prices

Source: CBS, OECD, Eurostat, BEA

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 1.2% growth in it’s GDP.

All data taken from OECD* Data from respective official source (CBS, OECD (forecast), Eurostat, BEA)

8

GDP ComponentsReal Annual Percentage Change

Effects of the global economic crisis

9

GDP per Capita$ U.S, Current prices, Current PPP, 2012

Source: OECD

10

Output GapAs percentage of Potential GDP, 2013 (based on data last updated 4/12/13)

Additional Sources: OECD Estimates

The actual - potential GDP Difference.Positive index means that actual output is higher than potential.

* Mainland Norway

11

Stock Exchange IndicesPercentage Change, end of period relative to end of previous period

Additional Sources: TASE, Bloomberg

3

4

2

5

Table of Contents

7

8

6

12


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

13

Exports of Goods and ServicesAs a share of GDP


14

Main Trading Partners$ US Billions, 2013

* The data on trade with Hong-Kong is added to the data regarding China

Source: Central Bureau of Statistics

15

Main Export DestinationsAs a share of total exports


16

Current Account SurplusAs % of GDP


17

Foreign Investments$ US Billions

* In 2006, a large acquisition by Teva Pharmaceutical Industries Ltd. was included in the data.


18

Exchange Rates 31 March 2014 vs 31 December 2013

Source: Pacific Exchange Rate Service

The change in the specified currency relative to the $ US

A decrease means an appreciation of the specified currency relative to the $ US

19

Terms of Trade = Export Prices to Import Prices Ratio


Terms of Trade2005 average = 100

20

Israel’s Free Trade Agreements

1985

1992

1997

1997

1999

2000

2007

USA

EFTA

Turkey

Canada

Mexico

European Union (Association Agreement)

MERCOSUR

QIZ Agreements

2004

1998

Egypt

Jordan

More comprehensive information is available on the Israel Ministry of Finance website

Colombia*2013

* Yet to be ratified

http://www.financeisrael.mof.gov.il/FinanceIsrael/Pages/en/EconomicData/InternationalAgreements.aspx

21

Bilateral Investment Treaties

Albania

Argentina

Armenia

Azerbaijan

Belarus

Bulgaria

China

Croatia*

India

Kazakhstan

Latvia

Lithuania

Germany

Cyprus

Czech Republic

El Salvador

Estonia

Georgia

Guatemala

Ethiopia

Hungary*

South Korea

Moldova

*Comprehensive information is available on the Israel Ministry of Finance website

Macedonia*


22

Bilateral Investment Treaties

*Comprehensive information is available on the Israel Ministry of Finance website** Yet to be ratified

South Africa**

Slovakia

Slovenia*

Serbia

Poland

Romania

Montenegro

Thailand

Turkey

Turkmenistan

Ukraine

Uzbekistan

Uruguay

Myanmar**


23

Economic OrganizationsMembership in main international economic organizations

Israel is a member of leading international economic organizations:

• United Nations Organizations

• United Nations Agencies

• World Bank Group

• International Monetary Fund

• OECD

• WTO

• Regional Organizations

• Inter-Governmental Organizations

• Pacific Alliance (observer)


http://www.financeisrael.mof.gov.il/FinanceIsrael/Pages/en/EconomicData/InternationalOrganizations.aspx

3

4

2

5

Table of Contents

7

8

6

24


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

25

Unemployment and ParticipationAs % of total labor force


Since the 2nd quarter of 2009 unemployment is relatively decreasing, with a gradual increase in the participation rate since the beginning of 2010.

26

Unemployment RateLatest available data

Additional Sources: OECD

27


Job CreationChange in the number of employees

Annual average relative to previous year average.

* January to February average seasonally adjusted.


28

Employment RatePeople aged over 15, latest available quarterly data

Additional Sources: OECD, Euro Stat

3

4

2

5

Table of Contents

7

8

6

29


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

30

General Government ExpenditureAs % of GDP

Source: CBS

31

General Government Tax BurdenAs % of GDP

Source: Central Bureau of Statistics, OECD

32

General and Central Budget DeficitAs % of GDP

Source: CBS, MoF

33

Public DebtAs % of GDP


Source: CBS, MoF

34

As % of GDP, international comparison

Source: CBS, MoF, OECD

Public Debt

35

Avoidance of Double Taxation


Austria

Belarus

Belgium

Brazil

Bulgaria

Canada

China

Croatia

Czech Republic

Denmark

Estonia

Ethiopia

Finland

France

Germany

Greece

Hungary

India

Ireland

Italy

Jamaica

Japan

Latvia

Lithuania

Luxembourg

Georgia

Malta


Avoidance of Double Taxation


Moldova

Norway

Philippines

Portugal

Poland

Romania

Russia

Singapore

Slovak Republic

Slovenia

South Korea

Spain

Sweden

Switzerland

Thailand

Netherlands Turkey

Ukraine

UK

Uzbekistan

USA

Taiwan

Vietnam

Mexico

South AfricaPanama*

36

* Yet to be ratified


3

4

2

5

Table of Contents

7

8

6

37

Foreign Trade and Balance of Payment

Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

38

Inflation RateRate of change in consumer price index


39

Interest Rate

Source: Bank of Israel

40

Central Bank’s Interest RatesInternational Comparison

Source: Specified Countries’ Central Banks

3

4

2

5

Table of Contents

7

8

6

41


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

42

Total industrial production grew by 3.8%

Industrial ProductionAverage Annual Growth - 2013 average relative to 2004 average


Industrial Export Current U.S. $ Billions, and the share of high tech and mid high tech sectors in the Israeli goods exports

43

73.2%

72.5%

75.4%

75.4%

76.3%

76.6%

77.4% 80.9

%

80%79.5

%

81%


83.6%

80.4%

4.4

1.8

1.3

3.8

2.8

2.3

2.0

1.81.9

1.7 1.7 1.6

1.3

0

1

2

3

4

5

Isra

el

Fin

lan

d

Ger

man

y

Fra

nce

Bel

giu

m

EU

27

Cze

ch R

ep.

Un

ited

Kin

gd

om

Can

ada

Irel

and

No

rway

Sp

ain

Ital

y

44

Israel is a World Leader in Science, Technology, and Innovation

Source: OECD. * International Institute for Management Development (IMD) Global Competitiveness Yearbook 2013. ** World Economic Forum (WEF) Global Competitiveness Report 2013-2014.

Civilian R&D as % of GDP, 2011 1st in R&D expenditure as % of GDP*

1st in quality of scientific research institutions**

1st in public expenditure on education*

1st for innovative capacity*

2nd for entrepreneurship being widespread amongst its managers*

5th in PCT patents applications per million population**

6th for strength of investor protection**

6th for Nobel Prizes per capita in the fields of physics, chemistry,

physiology, medicine and economics since 1950*

Global Competitiveness Report 2013-2014

“The country’s main strengths remain its world-class capacity for innovation (4th), which rests on highly innovative businesses that benefit from the presence of the world’s best research institutions geared toward the needs of the business sector. Israel’s excellent innovation capacity, which is supported by the government’s public procurement policies, is reflected in the country’s high number of patents (5th). Its favorable financial environment, particularly evident in the ease of access to venture capital (8th), has contributed to making Israel an

innovation powerhouse.”.

The Institute for Management

Development ranked Israel 19th

out of 60 countries for 2013.

Israel has been ranked 1st for

innovative capacity and 4th at

economy resilience.

Israel in IMD RankingsIMD World Competitiveness Yearbook 2013

Source: IMD World Competitiveness Yearbook 201345

(2) USA 1

(17) Finland 20

(19) Israel 19(18) United Kingdom 18

(20) Ireland 17(15) Australia 16

(14) Malaysia 15

(11) Netherlands 14(12) Luxemburg 13

(13) Denmark 12(7) Taiwan 11

(10) Qatar 10

(9) Germany 9

(16) UAE 8(6) Canada 7(8) Norway 6

(4) Singapore 5(5) Sweden 4

(1) Hong Kong 3

(3) Switzerland 2

Israel’s ranking compared to other IMD countries, Business Efficiency and Infrastructure

Israel’s ranking compared to other IMD countries, Economic Performance and Government Efficiency

Israel in IMD Rankings

Source: IMD World Competitiveness Yearbook 201346

Israel in WEF RankingsWorld Economic Forum Global Competitiveness Index 2013-2014

Source: World Economic Forum Global Competitiveness Index 2013-2014

The World Economic Forum ranked Israel

27th out of 148 countries for 2013-2014 in

terms of competitiveness.

The Forum also ranked Israel:

1st in Quality of scientific research

institutions

4th in Capacity for Innovation

5th in Firm-level technology absorption

6th in Strength of investor protection

6th in Nature of competitive advantage

6th in Company spending on R&D

5th in PCT patents, applications/million pop.

And 8th in Venture Capital Availability 47

48

Cooperation in Industrial R&D


North America New YorkMassachusettsMarylandVirginiaWisconsinColoradoIllinoisOregonBIRD (Foundation)Ontario CIIRDF (Foundation)

South America ArgentinaUruguayBrazil

Australia(Victoria)

Europe FranceRussiaItaly ( and Trento county)GermanyGreeceCzech RepublicBulgariaLithuania SloveniaDenmarkHungaryTurkeyPortugalFinlandSwedenIrelandSpainCyprusNetherlands* Through EUREKA (40 country Multilateral Initiative)

Asia China (Shanghai, Jiangsu, Shenzhen, Federal)India

SIIRD-Singapore (Foundation)KORIL-RDF-Korea (Foundation)

3

4

2

5

Table of Contents

7

8

6

49


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

Learn More

50

Visit the Israel Ministry of Finance

English website for more information:

Economic Overview of Israel

Other publications and reports on the Israeli economy

Ministry of Finance publications and reports

About the Ministry

Ministry press releases

Learn More

51

Bank of Israel

Ministry of Foreign Affairs

Ministry of Economy

Israel Central Bureau of Statistics

Israel Government Portal

Click to open:

3

4

2

5

Table of Contents

7

8

6

52


Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

Contact

53

Mr. Oded Keneresh, CPAMr. Daniel Hadow EricsonDr. Amichai FishlerOverseas Economic InformationChief Economist DepartmentMinistry of FinanceState of Israel

Send us an email:[email protected]@[email protected]

Visit our Website

Follow us on Twitter

Follow us on Linkedin

Follow us on YouTube

Follow us on Flickr

Subscribe to our RSS Feeds

Subscribe to our Newsletters

Economic Highlights Presentation 1 st Quarter 2014 (As of May 1 st ) STATE OF ISRAEL MINISTRY OF FINANCE Chief Economist Department – Research, State Revenue.

Documents

real gdp growth rate

gdp growth israel

oecd slide

percentage of potential

bea slide

contact slide

imf slide

bloomberg slide