Transcript Economic Highlights – Powerpoint Presentation

STATE OF ISRAEL
MINISTRY OF FINANCE
INTERNATIONAL AFFAIRS DEPARTMENT
ECONOMIC HIGHLIGHTS
4th QUARTER 2008
April 2009
International Affairs Department
Contents
Main Characteristics
2008 Summary
Economic Figures
Balances
Note:
You can return to the
beginning of each chapter
by clicking this symbols on
the top of each slide.
International Comparisons
Israel and the OECD
International Treaties
Relevant Sites
Israel’s Economy:
Main Characteristics
Highly Educated Population.
Rapid Development of Technology &
High-Tech Industries.
Entrepreneurial Culture.
Open Economy.
High Trade intensity.
Economic Figures
Press for desired slide or continue:
5-6
2008 Summary
7-8
Main Indicators and Forecast
9
GDP and GDP per Capita
10
Growth: Israel compared to the World
11
Major GDP Components
12
Exports of Goods and Services
13
Exports of Goods by Region
14
Main Trading Partners
15
Foreign Investments
16
Unemployment & Participation Rates
17
Inflation Rate
18
Inflation Rate Worldwide
19
Growth of Main GDP Components 2008
Back to Contents
2008 Summary
Following five years of fast growth, in the second half of 2008 the economy
reached a turning point, and the economy went into a recession as a result
of the worsening global financial crisis and its increased effects on the
local economy.
In the first half of the year the economy continued the same trends that
had typified the fast growth period:
-
High level of economic activity
Low rate of unemployment
Surplus of the current account
High savings rate
Reduction in the debt/GDP ratio
High profits in the business sector
In the last quarter of the year the economy entered a recession:
-
Sharp decreases in exports and tax revenues
Reduction in private consumption
Labor market: employment expansion came to a halt, wages fell and
unemployment began to rise
Source: Bank of Israel, annual report 2008
5
2008 Summary (cont.)
Inflation turnaround: Until September – high, as a result of rising world oil
and commodities prices and excess demand. After September – dramatic
decline as a result of falling world prices and a moderation of the excess
demand
With the worsening of the global crisis since September and the drop in
inflation, the interest rate has been reduced dramatically to an
unprecedented level in Israel’s history. The Bank of Israel has purchased
considerable sums of foreign currency in order to increase the country’s
reserves and as a measure to deal with the accelerated currency
appreciation; In February 2009 the Bank of Israel began to purchase
government bonds to ease credit conditions.
The budget deficit grew and the decline in the debt/GDP ratio slowed as a
result of the slowdown in activity and drops in the capital market, which
affected tax revenues, and due to further tax reductions.
Source: Bank of Israel, annual report 2008
6
Main Economic Indicators
Criteria
2004
2005
2006
2007
2008
GDP (current prices in $B)*
125.8
133.2
144.0
164.1
199.4
GDP Real Growth Rate (%)
5.0%
5.1%
5.2%
5.4%
4.0%
$24,271
$26,226
$27,355
GDP per Capita
(PPP adjusted)**
GDP per Capita Growth Rate
(%, Current prices)
3.2%
3.3%
3.3%
3.5%
2.1%
Exports (Goods & Services)** $B*
(As Percentage of GDP)
52.0
(41.3%)
57.2
(43.0%)
62.6
(43.5%)
71.2
(43.4%)
80.4
(40.3%)
Imports (Goods & Services)** $B*
(As Percentage of GDP)
52.1
(41.4%)
57.5
(43.2%)
62.2
(43.2%)
74.0
(45.1%)
84.1
(42.2%)
10.4%
9.0%
8.4%
7.3%
6.1%
Unemployment Rate (%)
*Using public exchange rate.
** In current prices
7
Main Economic Indicators
(con.)
Criteria
2004
2005
2006
2007
2008
Total Gross Debt (Percentage of GDP)
98.2%
94.3%
85.5%
79.8%
78.3%*
Government Expenditure
(Percentage of GDP)
47.6%
45.5%
45.0%
44.2%
43.5%
Current Account Surplus (% of GDP)
2.4%
3.2%
5.0%
2.6%
0.8%
Inflation Rate ( CPI, end of year)
1.2%
2.4%
-0.1%
3.4%
3.8%
Moody’s: A1
(Stable)
S&P: A
(Stable)
Fitch: A
(Stable)
Credit Rating
( Long-term Foreign Bonds )
About Credit Rating: The government’s credit rating reflects the economy’s level of risk and
affects banks, companies and financial bodies in the market.
The rating creates a “ceiling” which acts as a benchmark 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.
* Estimate.
Source: Ministry of Finance, Central Bureau of Statistics
8
GDP and Business GDP
(Annual rate of change (%), in Constant Prices)
In the past few years, Israel’s economy has enjoyed high growth rates.
In light of the world economic crisis, Israel’s growth has slowed down.
8.00%
6.80%
7.00%
6.00%
5.00%
5.10%
GDP
6.40%
6.10%
5.20%
Business GDP
6.20%
5.40%
5.00%
4.40%
4.00%
4.00%
3.00%
2.40%
1.80%
2.00%
1.20%
1.00%
-0.30%
0.00%
-0.60%
-1.00%
-2.00%
-1%
-1.50%
-1.60%
-2.40%
-2.40%
-3.00%
2001
2002
2003
2004
2005
2006
2007
2008
2009
Forecast
2010
Forecast
* Estimate.
Source: Ministry of Finance.
9
GDP Growth
Israel compared to Advanced Economies*
(Annual rate of change (%), in constant prices)
Since 2004, Israel’s growth rate has exceeded the average
growth rate of advanced economies.
6.0%
5.4%
5.2%
5.1%
5.0%
5.0%
4.0%
4.0%
3.2%
3.0%
2.0%
3.1%
2.6%
2.5%
2.0%
1.3%
1.6%
1.8%
1.1%
1.0%
0.0%
-0.3%
World Growth
-0.6%
-1.0%
Israel Growth
-2.0%
2001
2002
2003
2004
2005
2006
2007
2008
* Weighted average: US – 39%, Euro area – 46%, Japan – 3%, UK – 5%, Asian Newly Industrialized countries - 7%
Source: Ministry of Finance.
10
Major GDP Components
(Annual rate of change (%), in constant prices)
Public Consumption grew by
2.8% in 2008.
Private Consumption grew
by 3.9%.
17.5
18
15.3
13
9.9
8.6
8.1
8
6.1
5.4
4.2
3.7
3
0.9
0.3
-2
3.0
1.9
4
2.7
6.9
5.1
2.9
3.9
2.8
3
-1.9
-2.7
-4.6
-7
Exports grew by 3.0%.
-12
2003
Source: Ministry of Finance
2004
2005
2006
2007
Private Consumption
Government Consumption
Investment in Fixed Assets
Exports of Goods and Services
2008
11
Exports of Goods and
Services ($B)
In 2008, Exports grew by 3.0%
90
80
70
23.8
21.1
60
50
16
40
30
13.4
11.9
20
10
17.5
19.3
27.5
30.2
2002
2003
36.7
39.8
43.3
2004
2005
2006
50.1
56.6
0
Goods
Source: Central Bureau of Statistics
2007
2008
Services
12
Exports of Goods by Region
(excluding Diamonds)
North
America ,
37%
European
Union
29%
Africa
2%
Rest of
Europe , 6%
Asia , 18%
2007
Africa , 2%
Other , 7%
European
Union , 30%
Other
7%
Rest of
Europe
7%
Asia
20%
North America
35%
2008
Source: Central Bureau of Statistics
13
Israel’s Main Trading Partners
(US$ Billions, excluding diamonds)
20
China is becoming a
leading trade partner for
Israel
2008
18
16
14
11.6
12
10
18
8
6
16
4
1.9
7.1
5.1
2
14
12
1.5
2
1.6
2.5
2.5
1.6
1.6
1.2
1.8
1.8
1.9
0
10
1.9
6.9
4.3
2
um
gi
el
1.2
1.2
1.4
B
A
6
0.8
2.2
n
pa
Ja
ce
an
Fr
ey
rk
Tu
S
8
K
U
s
nd
ly
rla
Ita the
e
N
e
Th ny
a
m
er
G
na
hi
C
U
10
4
3.9
3.5
1.6
1.2
2.1
2.3
1.6
1.2
1.2
1.8
1.6
1.5
0
1
1.3
um
gi
el
B
n
pa
Ja
ce
an
Fr
ey
rk
Tu
K
U
an
rl
he
et
N
y
an
ds
Source: Central Bureau of Statistics
ly
Ita
e
Th
m
er
G
na
A
hi
C
S
U
2007
0.7
1.9
EXPORT
IMPORT
14
Net Foreign Investments in Israel
(B$)
18.9
20
18
Direct Investments
14.8
16
14.8
Total Investments
14
12
10
9.5
10
10.5
8.4
8.3
8
4.9
6
3.3
4
2
4.3
4.3
2.4
1.6
0
2002
Source: Ministry of Finance
2003
2004
2005
2006
2007
2008
15
Unemployment and Participation
(As % of Total Labor Force)
The Acceleration program, announced by the Ministry of Finance, is a package of
economic measures designed to accelerate activity in the Israeli economy, with
emphasis on the labor market.
8.0%
57.00%
7.8%
7.6%
56.5%
7.5%
56.6%
56.6%
56.5%
56.4%
7.0%
56.4%
7.2%
56.1%
56.50%
56.00%
56.1%
6.7%
6.5%
6.30%
55.50%
6.20%
6.00%
6.0%
55.00%
Unemployment Rate
6.00%
Participation in the Labor Force
5.5%
54.50%
2007 Q1
Q2
Source: Central Bureau of Statistics
Q3
Q4
2008 Q1
Q2
Q3
2008 Q4
16
Inflation Rate
(Rate of Change in CPI, end of year)
The Consumer Price Index (CPI) grew by 3.8% during 2008.
7%
6%
6.5%
5%
4%
3.8%
3%
3.4%
2%
1%
2.4%
1.3%
0.0% 1.4%
1.2%
-0.1%
0%
-1%
-1.9%
-2%
1999
2000
2001
2002
Source: Central Bureau of Statistics, Ministry of Finance
2003
2004
2005
2006
2007
2008
17
Inflation Rate Worldwide
(Rate of Change in CPI, end of 2007)
Inflationary pressures in Israel have decreased, as a result of the world crisis.
14%
12%
10%
8%
6%
4%
3.4%
2%
0%
d
an
el
Ic
ey
rk
Tu r y
ga
un
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o
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ex
M
um
gi
el y
B
an
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er
G
nd
la
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an
nl
Fi
SA
U
ay
w
or
N
el
ra
Is
al
ug
d
rt
Po rlan
e
itz
Sw
n
pa
Ja
Sources: Central Bureau of Statistics, OECD
18
Growth of Main GDP
Components 2008
Criteria
2008
Real GDP
+ 4.0%
Business GDP
+ 4.4%
Exports
+ 3.0%
Private Consumption
+ 3.9%
Public Consumption
+ 2.8%
Investment in Fixed Assets
+ 5.1%
Source: Ministry of Finance
19
Balances
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21 Gross Public Debt
22 Budget Deficit ;
General Government Expenditure
23 Current Account ;
Net Foreign Debt
24 Gross Tax Burden
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Gross Public Debt
(as percentage of GDP)
Since 2003, the gross public debt has been on a downward trend.
99.9%
100%
97.6%
98.2%
94.3%
95%
90%
85.5%
85%
79.8%
78.30%
80%
75%
2002
Source: Ministry of Finance
2003
2004
2005
2006
2007
2008
21
Budget Deficit and
General Government Expenditure
50.40%
2003
47.60%
General Government
Expenditure (% of GDP)
2004
45.50%
2005
45.00%
2006
44.20%
2007
43.50%
52.00%
50.00%
48.00%
44.00%
42.00%
40.00%
5.30%
2003
3.60%
2004
1.80%
2005
2006
46.00%
2008
Budget Deficit
1.00%
2007 0.00%
2.10%
2008
0.00%
1.00%
Source: Ministry of Finance
2.00%
3.00%
4.00%
5.00%
22
Current Account Balance and
Net Foreign Debt
In 2003, current account turned positive,
conversely with the decrease of the net foreign debt.
6.0%
5.0%
5.0%
3.2%
4.0%
2.4%
3.0%
2.6%
Net Foreign Debt
1.2%
2.0%
1%
(% of GDP)
1.0% -1.0% -0.8%
0.6%
0.0%
5%
-1.0%
-2.0%
0%
2001 2002
2003 2004
2005 2006
2007 2008
-2.2%
-5%
-5.5%
-10%
Current Account
Surplus
(% of GDP)
-15%
-13.4%
-17.9%
-20%
-23.1%
-25%
-26.2%
-30%
2002
2003
2004
2005
2006
2007
2008*
* As of 30/06/08, as percentage of 2007 GDP.
Source: Ministry of Finance.
23
Gross Tax Burden
(as % of GDP)
Tax burden has been in the vicinity of OECD average since 2003
37.30% 37.30%
36.80%
36.60%
36.30%
36.40%
35.80% 35.80% 35.90%
34.30%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
- - - OECD countries average: 33.2%*
Source: Ministry of Finance, OECD
*As of 2006
24
International comparisons
and additional data
Press for desired slide or continue:
26
Central Bank Interest Rates
27
NASDAQ and Tel Aviv 100 Indices
28
Israel’s Credit Rating
29
Global Competitiveness Index
30
Global Competitiveness Index: Selected Issues
32
Business Competitiveness Index ;
Network Readiness Index
Back to Contents
Central Bank Interest Rates
Israel vs. U.S.A
Coinciding with the FED’s low interest rate, BOI interest rate continues
to decrease.
6%
U.S. Federal Funds Rate
5%
Bank of Israel Rate (BOI)
4%
3%
2%
1%
0.0%
4
3
2
1
12
11
10
9
8
7
6
5
4
3
2
1
12
11
10
9
8
7
6
5
4
3
2
1
12
11
10
9
8
7
6
5
4
3
2
1
0%
0.5%
2006
Source: Bank of Israel (BOI), Federal Reserve
2007
2008
2009
26
NASDAQ & Tel Aviv 100
(monthly average)
Tel Aviv 100 reacts to the current events similarly to the NASDAQ,
yet less drastically.
4,000.00
1200
Nasdaq (left scale)
1100
3,500.00
1000
Tel Aviv 100 (right scale)
900
3,000.00
800
2,500.00
700
600
2,000.00
500
400
1,500.00
300
1,000.00
200
y
n
Ja
l
Ju
y
09
20
08
20
08
20
ry
07
20
a
nu
Ja
l
Ju
07
20
06
20
n
Ja
l
Ju
06
20
05
20
n
Ja
l
Ju
05
20
04
20
04
20
n
Ja
l
Ju
n
Ja
Source: Tel Aviv Stock Exchange (TASE) and the Ministry of Finance.
27
Israel’s Credit Rating 1992-2008
In January 2009, The Credit Rating Agencies Moody's and
S&P Reconfirmed Israel's Credit Ratings
A1/A+
A2/A
A3/ABaa1/BBB+
Baa2/BBB
Moody's A1 Stable
S&P A Stable
Fitch A Stable
Baa3 /BBB-
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Credit Rating Agencies, Accountant General
28
Global Competitiveness Index,
2008-2009
Israel Ranks 23rd out of 134 Countries
2
1
6
9
16
22
23
28
24
29
49
42
32
51
61
67
d
A
S lan
U
er
it z
w
S d
an
nl
Fi
n
pa
Ja
ce
an
Fr d
an
el
Ir
el
nd
ra
la
Is e a
Z
ew
N
le
hi
C
in
pa
S ia
on
st ia
en
E
S
v
lo
ly
Ita
a
si
us
R ia
at
ro
C e
ec
re
G
Countries that have been invited for open discussions for joining the OECD.
Source: World Economic Forum, Global Competitiveness Index, 2008-9
29
Global Competitiveness Index, 2008/9
SELECTED CATEGORIES
Venture Capital Availability
Availability of Scientists & Engineers
United States
Finland
Sweden
Japan
Israel
India
Denmark
United States
Israel
Singapore
Puerto Rico
Australia
Denmark
Estonia
Greece
New Zealand
Belgium
Switzerland
Netherlands
0
5
10
15
20
25 RANK
0
Quality of Scientific Research Institutions
United States
Israel
Japan
Canada
United States
Germany
Denmark
Finland
Israel
Netherlands
Finaland
Singapore
United Kingdom
France
France
Norway
Iceland
Estonia
Hong Kong SAR
5
10
15
20
25 RANK
Source: World Economic Forum, Global Competitiveness Index, 2008-9
20
30 RANK
Company Spending on R&D
Switzerland
0
10
0
5
10
15
20
25 RANK
30
Global Competitiveness Index, 2008/9
SELECTED CATEGORIES (con.)
Strength of Investor Protection
Availability of Latest Technologies
New Zealand
Finland
Hong Kong SAR
Israel
Israel
India
Ireland
Sweden
United States
Switzerland
United Kingdom
United States
Japan
Korea, Rep.
Norway
Germany
Denmark
Belgium
Chile
Norway
0
5
10
15
20
0
25 RANK
Utility Patents
Hong Kong SAR
Israel
United Kingdom
Switzerland
New Zealand
Sweden
Singapore
Canada
Germany
Luxemburg
Israel
Australia
Ireland
UK
Canada
Belgium
United States
Italy
Iceland
5
10
15
10
15
20
25 RANK
Legal Rights Index
Taiwan, China
0
5
20
25 RANK
Source: World Economic Forum; Global Competitiveness Index, 2008-9
0
5
10
15
20 RANK
31
Israel’s Rank in Leading Indices
Business
Competitiveness
Index
2008-9
The Networked Readiness Index 2008–2009
1
Denmark
3
United States
6
13
Taiwan
9
18
Estonia
16
22
25
Israel
23
29
Qatar
24
31
Slovenia
28
39
29
32
46
42
54
India
49
59
61
69
67
G
re
ec
e
74
ro
at
i
R a
us
si
a
It
Sl aly
ov
en
Es i a
to
ni
a
Sp
ai
n
N
ew Ch
Ze ile
al
an
d
Is
ra
e
Ir e l
la
n
Fr d
an
ce
Ja
pa
n
F
Sw inla
itz nd
er
la
nd
Poland
51
C
Brazil
SA
China
U
Chile
Russia
2
6
Finland
1
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]
**GCI: Provides a holistic overview of factors critical to productivity and competitiveness [LINK TO SITE]
32
Israel and the OECD
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34 Real GDP growth in 2007-8
35 Unemployment Rate in 2007-8
36 GDP Based on PPP per Capita in 2006
Back to Contents
Real GDP Growth
(Annual percentage of change, partial list)
The global recession has influenced all of the OECD countries’ growth rates.
12%
10%
8%
5.3%
07’
4.1%
08’
6%
4%
2%
07’ 08’
2.6%
1.4%
0%
-2%
w
Ne
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at
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De
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do
Sw
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Un
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Un
n
ai
d
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nl
Sp
Fi
da
na
Ca
en
ed
Sw
rg
u
bo
nd
la
Ire
el
ra
Is
ea
m
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r
Ko
Lu
ey
ic
rk
bl
Tu
pu
Re
ak
ov
Sl
ea
ar
ro
Eu
D
EC
lO
ta
To
Source and projections: OECD and the Ministry of Finance, Israel
34
Unemployment Rate
(average)
Israel
08’
07’
Finland
Greece
Portugal
Sw itzerland
08’ 07’
Korea
Norw ay
Change 07’-08’
Hungary
United States
Ireland
Spain
Euro area
08’
07’
Total OECD
-2%
08’
07’
1%
Source: OECD, Ministry of Finance
3%
5%
7%
9%
11%
35
GDP per capita
based on purchasing-power-parity (PPP)
2007, (in US$)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
ey
rk
Tu o
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ex
M d
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Po ary bl ic
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Hu R
ak
ov l
Sl
ic
ga b l
rt u pu
Po Re
h
ec
Cz
a
re
Ko
el
ra
Is
ly
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n
ai
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Sp e
c
ag
a n ver
Fr
A
D
EC
O any
m
er
G
m
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do
pa i ng
Ja
K
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it e
Un d
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Fi ark
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nm la n
De e a
Z
w nd
Ne erla
itz
Sw d
s
lan ate
Ire St
d
it e
Un y
a
rw urg
No bo
m
xe
Lu
Source: Economics and Research Department calculations from OECD and the Central Bureau of Statistics data
36
International Treaties
Press for desired slide or continue:
37
Israel’s Free Trade Agreements
38-9
Avoidance of Double Taxation Agreements
40
Cooperation in Industrial R&D Agreements
41-2
Protection of Investments Agreements
43
International Organization Memberships
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Israel’s Free Trade
Agreements
1985
USA
1992
EFTA
Egypt
1997
Turkey
Jordan
1997
Canada
1999
Mexico
2000
European Union
2007
MERCOSUR*
QIZ Agreement
(Association Agreement)
* Member states of the common market of the south, not yet in force
37
Avoidance of Double
Taxation Agreements
Austria
Croatia
Hungary
Belarus
Denmark
India
Belgium
Estonia *
Ireland
Brazil
Ethiopia
Italy
Bulgaria
Finland
Jamaica
Canada
France
Japan
China
Germany
Latvia
Czech
Republic
Greece
Lithuania
* The agreement with Estonia has only been signed initially
38
Avoidance of Double
Taxation Agreements (con.)
Luxembourg
Russia
Switzerland
Mexico
Singapore
Thailand
Moldova
Slovakia
The Netherlands
Norway
Slovenia
Turkey
Philippines
South Africa**
Ukraine
Portugal *
South Korea
United Kingdom
Poland
Spain
Uzbekistan
Romania
Sweden
USA
* The agreement with Portugal has been recently ratified
** Not yet ratified by South Africa.
39
Cooperation in Industrial R&D
Agreements
Austria
India
Sweden
Belgium
Ireland
UK
Canada
Italy
USA
China
Korea
Finland
Netherlands
France
Portugal
Germany
Singapore
Hong Kong
Spain
40
Protection of Investment
Agreements
Albania
Croatia
Guatemala
Argentina
Cyprus
India
Armenia
Czech Republic
Kazakhstan
Azerbaijan
El-Salvador
Korea
Belarus
Estonia
Latvia
Bulgaria
Georgia
China
Germany
41
Protection of Investment
Agreements (con.)
Lithuania
Turkmenistan
Moldova
Ukraine
Poland
Uruguay
Romania
Uzbekistan
Slovakia
Slovenia
South Africa
Thailand
Turkey
42
International Organization*
Memberships:
BIS | BSEC (observer) | CE (observer)
CERN (observer) | EBRD | FAO | IADB | IAEA
WBG – IBRD, IFC, IDA, MIGA | ICAO | ICC | ICCT (signatory) |
ICFTU | IFAD | IFRCS (observer) | ILO | IMF
IMO | Interpol | IOC | IOM | ISO | ITU | OAS (observer) |
OECD (candidate) | OPCW (signatory) OSCE (partner) |
PCA | UN | UNCTAD | UNECE | UNEP | UNESCO | UNHCR
UNIDO | UPU | WCO | WFP | WHO | WIPO | WMO | WTOO
WTRO | WTO | ICSID
* Economic Organizations
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Relevant Sites
International Affairs Department Homepage:
WWW.FINANCEISRAEL.MOF.GOV.IL
Government Institutions:
Ministry of Finance
OECD Stat Profile on Israel
Bank of Israel (BOI)
Central Bureau of Statistics
Israeli Government Portal
Israel Securities Authority
Ministry of Industry, Trade and Labor
OECD Israel
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We welcome your feedback!
Contact:
Ms. Ravit Friedberg
International Affairs Department
Ministry of Finance, Jerusalem, Israel
[email protected]
Click here for our website!
www.FINANCEISRAEL.mof.gov.il
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