Economic Highlights Presentation 2 nd Quarter 2013 ( As of July 1 th )

Economic Highlights Presentation2nd Quarter 2013( As of July 1th)

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

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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

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Economic Figures

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

Criteria201120122012 Q22012 Q32012 Q42013Q12013Q2

GDP(Current prices in $B)*

243.9240.960.559.860.863.8-

Real GDP growth rate(% change)

4.6%3.2%2.6%2.8%2.6%2.7%-

GDP per capita(Current $)

31,419$30,476$7,685$7,547$7,643$7,893$-

GDP per capita growth rate (%, 2005 prices)

2.7%1.3%0.9%0.9%0.5%0.9%-

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

91.037.3%

90.137.4%

24.039.6%

21.936.7%

22.436.7%

22.535.2%

-

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

92.237.8%

92.738.5%

23.739.1%

23.038.4%

21.735.6%

21.533.6%

-

Unemployment rate**7.1%6.9%6.9%6.8%6.8%6.6%6.9%

Sources: CBS, IMF

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Economic Figures

Criteria200720082009201020112012

Public debt(As % of GDP)

78.6%77.4%79.6%76.3%74.0%73.2%

General government expenditure (As % of GDP)

45.2%44.3%44.5%43.8%43.4%43.4%

Current account surplus(As % of GDP)

3.2%1.4%4.1%3.3%1.3%0.4%

Inflation rate(CPI, yearly average, % change)

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

Budget deficit(As % of GDP)

0.0%2.2%5.1%3.7%3.3%4.2%

* MoF Estimates

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Labor Market

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

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

Source: CBS, OECD Stat

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 1.1% growth in it’s GDP.

* MoF forecast, Euro stat and OECD forecast

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GDP ComponentsReal Annual Percentage Change

Effects of the global economic crisis

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

Additional Sources: OECD

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Output GapAs percentage of Potential GDP, 2012

Additional Sources: OECD Estimates

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

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

Additional Sources: TASE, Bloomberg

* The change since the beginning of 2013 till the end of the specified quarter.

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Labor Market

Real Economy

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Exports of Goods and ServicesAs a share of GDP


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Main Trading Partners$ US Billions, 2012

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

Source: Central Bureau of Statistics

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Main Export DestinationsAs a share of total exports


* Relates to January-April 2013

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Current Account SurplusAs % of GDP


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Foreign Investments$ US Billions

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


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Exchange Rates 30 June 2013 vs 31 December 2012

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

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Terms of Trade = Export Prices to Import Prices Ratio


Terms of Trade2005 average = 100

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Israel’s Free Trade Agreements

QIZ Agreements1985

1993

1997

1997

2000

2000

2007

USA

EFTA

Turkey

Canada

Mexico

European Union (Association Agreement)

MERCOSUR

2004

1998

Egypt

Jordan

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

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

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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*

Korea

Moldova

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

Macedonia*


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Bilateral Investment Treaties

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

South Africa*

Thailand

Slovakia

Slovenia*

Serbia

Poland

Romania

Montenegro

Turkey

Turkmenistan

Ukraine*

Uzbekistan

Uruguay


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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

• Regional Organizations

• Inter-Governmental Organizations


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

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Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

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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.

*Available data.

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Unemployment RateLatest available data

Additional Sources: OECD

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Job CreationChange in the number of employees

Annual average relative to previous year average.

* April to May average.


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Employment Rate15+, latest available quarterly data

Additional Sources: OECD, Euro Stat

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Labor Market

Real Economy

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Innovative Economy

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General Government ExpenditureAs % of GDP


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General Government Tax BurdenAs % of GDP

OECD countries average: 33.8%(2011 average)

Source: Central Bureau of Statistics, OECD

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General and Central Budget DeficitAs % of GDP

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Public DebtAs % of GDP


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Public DebtAs % of GDP, international comparison

Source: OECD

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Israel’s Credit Ratings

Rating FirmTermDomestic Bonds

ForecastOverseas Bonds

RatingRating

Moody'sLongA1

StableA1

Short-P1

Standard & Poor's

LongA+Stable

A+

ShortA-1+A-1

FitchLongA+

StableA

Short-F1

Updated to mid-September, 2012

Nov 2007S&P

upgradesIsrael To A

Nov 2007S&P

upgradesIsrael To A

April 2008Moody’s

upgradesIsrael To A1

April 2008Moody’s

upgradesIsrael To A1

Sep 2011S&P upgradesIsrael To A+

Sep 2011S&P upgradesIsrael To A+

Feb 2008Fitch upgrades

Israel To A

Feb 2008Fitch upgrades

Israel To A

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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


Avoidance of Double Taxation


Moldova

Norway

Philippines

Portugal

Poland

Romania

Russia

Singapore

Slovak Republic

Slovenia

South Africa

Spain

Sweden

Switzerland

Thailand

NetherlandsTurkey

Ukraine

UK

Uzbekistan

USA

Taiwan

Vietnam

Mexico

South KoreaPanama

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Foreign Trade and Balance of Payment

Labor Market

Real Economy

Fiscal Stance

Innovative Economy

Learn More


Table of Contents

1 Main Indicators

9 Contact

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Inflation RateRate of change in consumer price index


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Interest Rate

Source: Bank of Israel

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Central Bank’s Interest RatesInternational Comparison

Source: Specified Countries’ Central Banks

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Labor Market

Real Economy

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Innovative Economy

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Total industrial production grew by 3.9%

Industrial ProductionAnnual 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

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73.2%

72.5%

75.3%

75.4%

76.3%

76.7%

77.4% 80.9

%

80.3%

80.1% 79.5

%


80.6%

* 2013 available months at annual rate

4.4

1.8

1.4

3.9

2.8

2.3

2.0

1.81.9

1.81.7

1.6

1.3

0

1

2

3

4

5

Isra

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Ger

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EU

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Can

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

Source: OECD Science, Technology and Industry Scoreboard 2011. * International Institute for Management Development (IMD) Global Competitiveness Yearbook 2011. ** World Economic Forum (WEF) Global Competitiveness Report 2012-2013.

Civilian R&D as % of GDP, 2009 1st in R&D expenditure as % of GDP*

1st in quality of scientific research institutions**

1st for entrepreneurship being widespread amongst its managers*

2nd in public expenditure on education*

3rd in venture capital availability**

4th in PCT patents applications per million population**

5th for strength of investor protection**

6 Israelis in the last 10 years have been awarded Nobel Prizes in

the fields of Economics or Chemistry

Global Competitiveness Report 2012-2013

“The country’s main strengths remain its world-class capacity for innovation (3rd), 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 (4th). Its favorable financial environment, particularly evident in the ease of access to venture capital (3rd), has contributed to making Israel

an innovation powerhouse.”.

The Institute for Management

Development ranked Israel 19th

out of 59 countries for 2012.

Israel has been ranked 1st at

entrepreneurship and 9th at

economy resilience.

Israel in IMD RankingsIMD World Competitiveness Yearbook 2013

Source: IMD World Competitiveness Yearbook 201346

(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 RankingsIMD World Competitiveness Yearbook 2012

Source: IMD World Competitiveness Yearbook 201247

Israel in WEF RankingsWorld Economic Forum Global Competitiveness Index 2012-2013

Source: World Economic Forum Global Competitiveness Index 2012-2013

The World Economic Forum ranked Israel

26th out of 144 countries for 2012-2013 in

terms of competitiveness.

The Forum also ranked Israel:

1st in Quality of scientific research

institutions

3rd in Venture capital availability

4th in PCT patents, applications/million pop.

5th in Strength of investor protection

5th in Firm-level technology absorption

6th in Capacity for innovation

6th in Company spending on R&D

And 8th in University-industry collaboration

in R&D48

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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)

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Labor Market

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Learn More

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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

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Bank of Israel

Ministry of Foreign Affairs

Ministry of Industry, Trade and Labor

Israel Central Bureau of Statistics

Israel Government Portal

Click to open:

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Labor Market

Real Economy

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Innovative Economy

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Contact

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Mr. Roni HershkovitzMr. Ori KaufmanDr. Amichai FishlerOverseas Economic InformationEconomics and State Revenue DepartmentMinistry of FinanceState of Israel

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Economic Highlights Presentation 2 nd Quarter 2013 ( As of July 1 th )

Documents

real gdp growth rate

israels growth rate

unemployment rate

gdp growthisrael

periodic average exchange

economic figures

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