Israel Economy

Israel Economy
The Israel Export & International
Cooperation Institute

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Israel’s Economy

Main Characteristics

Export Oriented Growth

Rapid Development of Technology &
Hi-Tech Industries
High Skilled Human Resources

Entrepreneurial Culture (Start Up Nation)


Israel Economy –
Past & Present

1985 2011
GDP per capita (us=100) 6,171 $ 32,298 $

Inflation Rate (Year End) 470% 2.2%

Current Account Balance
-5.8% 0.1%
(% of GDP)
Budget Balance
-14.4% 3.7%
(% of GDP)

Government Debt (% of GDP) 159.5% 73.3%


Gross Public Debt
(as % of GDP)

Since 2003, government debt has been on a consistent downward trend,
only interrupted by the extraordinary circumstances surrounding the
2009 global economic crisis
United States 120
Israel
110
United Kingdom
100

90

80

70

60

50

40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: EIU


Macro Economic
indicators

Criteria 2007 2008 2009 2010 2011

GDP (B$ -at current market prices) 167 202 195 218 243

GDP Real Growth rate (%) 5.5% 4.0% 0.8% 4.8% 4.7%

GDP per Capita (PPP, $) 26,660 27,850 27,710 28,850 30,160

Exports of Goods & Services (B$) 71 81 68 80 90

Imports of Goods & Services (B$) 74 84 63 76 92

Unemployment Rate (%) 7.3% 6.1% 7.5% 6.6% 5.6%

Inﬂt i o R t e (Year End)
a n a 3.4% 3.8% 3.9% 2.7% 2.2%

Current Account balance (% of GDP) 2.7% 0.9% 3.6% 2.9% 0.1%

Source: EIU, CBS, Bank of Israel


World GDP Growth

6 5.5
world 4.8 4.7
US 4 4 4
4
3 3 3.1
Euro area 2.7 2.6 2.8
OECD 1.9 1.8 2 1.8
2 1.7 1.5 1.8
1.3 1.1
Israel 0.8
0.3 0.1
0
-0.3
-0.7
-2
-2.4

-4 -3.5 -3.7
-4.2

-6
2007 2008 2009 2010 2011 2012

Forecast


Real GDP Growth
3-year average, end of period
(2008-2010)

Israel’s 3-year average growth rate is higher then most OECD members.

Source: Ministry of Finance


Israel’s
Credit Ratings

Domestic Bonds Overseas Bonds
Rating Firm Term Forecast
Rating Rating
Long A1 A1
Moody's Stable
Short - P1
Long AA- A+
Standard & Poor's Stable
Short A-1+ A-1
Long A+ A
Fitch Stable
Short - F1



Current Account Balance
& Net Foreign Debt

Current Account Surplus Net Foreign Surplus*
(% of GDP) (% of GDP)

Since 2003, the current account balance is positive, and is accompanied by a
decrease of net foreign debt
Source: EIU

Expenditure on
R&D
as % of GDP ,2010

Israel is 1st in the OECD in expenditure on R&D (research & development) as %
of GDP, demonstrating innovation, development and creativity.


Export of Goods &
Services
In Billions of $

Export of Goods 24 27
24
Export of Services 20 21
18
15 17

16 13 12 13
56 63
51 58 46
8 40 44
5 31 30 37
28 28
20
13

1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Central Bureau of Statistics , *2011: IEICI Forecast


Export of Goods to
the World
2011, Excluding Diamonds

Rest of Europe
7%

North America Asia
27% E.U. 19%
32%

Africa Rest of World
3% 6%
Latin America
4%

A shift from traditional market to Asian markets
Source: Central Bureau of Statistics


The Industrial Export
by Sector
Export in 2011

2B$
Low Tech Industries
21.4B$ 5%

Hi-Tech Industries 7.7B$
47%
Med-Low Tech Industries
17%

13.9B$
Med-Hi Tech Industries
31%


Industry Export
Growth by sector
1995-2011 In the past decade the industrial export was mainly aﬀected b
y
the rapid growth of the Hi-Tech industry

B$



Growth of Main
Hi-tech sectors
In the past decade the industrial export was mainly aﬀected b
y
1995-2011 the rapid growth in equipment for control & supervision and
Pharmaceutical products
B$



Main Hi-tech
Services Sectors
2002-2011
Billions of $



Main Hi-tech
Sectors
Total High-tech Export of 2011: 31.5 B$
Industries: 68% (70% Last year)
Services: 32% (30% Last year)

Source: CBS & IEICI Calculations’


World Population
By median

Source: CIA World Factbook


Israel’s Free Trade
Agreements

1985 USA
QIZ Agreements
1992 EFTA

1997 Turkey Egypt (2004)

1997 Canada
Jordan (1998)
1999 Mexico

2000 European Union (Association Agreement)

2007 MERCOSUR (Argentina not yet in force)

* Member states of the common market of the south, not yet in force


Cooperation in Industrial
R&D Agreements

Austria India Sweden

Belgium Ireland United kingdom

Canada Italy U.S.A

China Korea Victoria (Australia)

Finland Netherlands Czech Republic

France Portugal

Germany Singapore

Hong Kong Spain



Israel in Global
Perspective

Doing Business Index (World Bank)/183


Israel in Global
Perspective

The Global Competitiveness Index- WEF/142

The World Economic Forum ranked Israel 22th

out of 142 countries for 2011-2012


Israel in Global
Perspective
The Global Competitiveness Index

Quality of scientific research institutions Venture capital availability

Utility patents per million population Strength of investor protection


Israel in Global
Perspective
The Global Competitiveness Index

Government procurement of advanced
technology products Capacity for innovation

Firm-level technology absorption University-industry collaboration in R&D


Israel in Global
Perspective

IMD World Competitiveness Yearbook 2011

The Institute for Management Development

ranked Israel 17th out of 59 countries for 2011
(Israel was ranked 17th in 2010 and 24th in 2009)

Source: International Institute for Management and
Development (IMD), World Competitiveness Yearbook 2011


Israel in Global
Perspective


Information technology skills Central bank policy

Flexible and adaptability Entrepreneurship


Israel in Global
Perspective


Total expenditure on R&D (as % of GDP) Scientific research

Venture capital Innovative capacity


Small country,
great spirit!

Israel's technology advantages:
§ Israel has an entrepreneurial spirit
§ Israel has the mentality of early adopters
§ Israel has a creative fusion between academy and
business
§ Israel has a defense technology
commercialization
§ Israel has highly skilled workforce
§ Israel has a powerful VC community
§ Israel has investment and R&D incentives


Thank you
Shauli katznelson
Deputy Director General

shauli@export.gov.il


Israel Economy

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