ECONOMIC TALKING POINTS

1. STATE OF ISRAELMINISTRY OF FINANCEINTERNATIONAL AFFAIRS DEPARTMENT ECONOMIC TALKING POINTS May 6th, 2007

2. Contents: • Economic Figures……. • Balances……………... • International comparisons and additional data………. 3 18 24

3. Economic Figures

4. Economic Figures Israel’s Economy:Main Characteristics • Export Oriented Growth • Rapid Development of Technology & High-Tech Industries • Entrepreneurial Culture • Supportive Environment for Business • Investment & R&D Incentives 4

5. Economic Figures Main Economic Indicators and forecast Source: Central Bureau of Statistics, Bank of Israel, Ministry of Finance * Using the NIS estimate by the Ministry of Finance, Multiplied by Bank of Israel’s average US$-NIS rate for 2007. 5

6. Economic Figures GDP and GDP per Capita (Annual % Change, in Constant Prices) 6 Source: Central Bureau of Statistics, Ministry of Finance

7. Economic Figures Major GDP Components(Annual % Change, in Constant Prices) 7 Source: Central Bureau of Statistics, Bank of Israel, Ministry of Finance

8. Economic Figures GDP Growth and Exports Growth(Cumulative Rate of Growth by Period) 8 Source: Central Bureau of Statistics, Bank of Israel, Ministry of Finance

9. Economic Figures Exports of Goods and Services (B$) 9 Source: Central Bureau of Statistics

10. Economic Figures Exports of Goods by Region 2006(exc. Diamonds) 10 Source: Central Bureau of Statistics, Bank of Israel, Ministry of Finance

11. Economic Figures Structure of Industrial Exports 25% 25% 26% 27% 23% 24% 27% 26% 35% 75% 75% 74% 77% 73% 76% 74% 73% 65% 11 Jan-Mar s.a. at annual rate.*

12. Economic Figures Imports of Goods by Region 2006(exc. Diamonds) 12 Source: Central Bureau of Statistics, Bank of Israel, Ministry of Finance

13. Economic Figures Foreign Investments(B$) 13 Source: Ministry of Finance

14. Economic Figures Unemployment Rate by Quarters*(% of Total Labor Force) 14 Source: CBS

15. Economic Figures New Employed Persons in 2006(Change in Israeli Employed Persons, in Thousands) 15 Source: Ministry of Finance

16. Economic Figures Inflation Rate (% Change in CPI, end of year) 16 Source: CBS, Ministry of Finance

17. Economic Figures Estimated Growth of Main GDP Components 2007 17 Source: Ministry of Finance

18. Balances Back to contents

19. Balances Budget Deficit(% of GDP) Budget proposal 19 Source: Ministry of Finance, April 2007

20. Balances Current Account(% of GDP) 20 Source: Bank of Israel

21. Balances Net Foreign Debt(% of GDP) 21 Source: Ministry of Finance

22. Balances General Government Expenditure(% of GDP) 22 Source: Ministry of Finance

23. Balances Gross Tax Burden(% of GDP) 23 Source: Ministry of Finance

24. International comparisons and additional data Back to contents

25. Additional data Central Bank Interest RatesIsrael vs. U.S.A (%) Currently: 5.25% Bank of Israel Rate Currently: 3.75% Federal Reserve Rate 25 Source: Bank of Israel, Federal Reserve

26. Additional data Nasdaq Index & Tel Aviv 100 (monthly average) 26

27. Additional data A1/A+ A2/A A3/A- Baa1/BBB+ Baa2/BBB Baa3 /BBB- Israel’s Credit Rating 1992-2007 27 Source: Credit Rating Agencies, Accountant General

28. Additional data Global Competitiveness Index, 2006Israel Ranks 15 Out of 125 Countries (2005 Rank was 23) 1 4 6 8 10 15 18 21 24 28 34 42 47 48 58 59 28 Source: World Economic Forum, GCI 2006

29. Additional data Business Competitiveness Index, 2006Israel Ranks 19 Out of 121 Countries (2005 Rank was 22) 1 2 5 8 12 16 19 22 25 27 30 36 46 49 55 64 29 Source: World Economic Forum, GCI 2006

30. Additional data Network Readyness score, 2006 5.71 (1) 5.58 (5) 5.54 (7) 5.45 (9) 5.35 (11) 5.27 (14) 5.22 (16) 5.14 (18) 4.99 (23) 4.48 (28) 4.35 (32) 4.19 (38) 3.98 (48) 3.86 (52) 30 Source: World Economic Forum, GCI 2006

31. Additional data USA (1985) EFTA (1992) Jordan (1995):Bilateral Trade Agreement Turkey (1997) Mexico (1999) European Union – Association Agreement 2000 Romania (2000) Bulgaria (2002) Israel’s Free Trade Agreements Canada (1997) 31

32. Additional data Avoidance of Double Taxation Agreements Also: Austria, Ireland, Italy,Latvia,Lithuania, Switzerland,Ukraine, United Kingdom, and Uzbekistan. 32

33. Additional data 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 33

34. Additional data Albania Argentina Armenia Belarus Bulgaria Croatia Cyprus Czech Republic El-Salvador Estonia Georgia Germany Hungary India Kazakhstan Korea Protection of Investment Agreements 34

35. Additional data Latvia Lithuania Moldova Poland Romania Slovakia Slovenia Thailand Turkey Turkmenistan Ukraine Uruguay Uzbekistan QIZ Agreement Egypt Jordan Protection of Investment Agreements(con) 35

36. Additional data International Organization* Memberships: BIS | BSEC (observer) | CE (observer) CERN (observer) |EBRD |FAO | IADB | IAEA IBRD | ICAO | ICC| ICCt (signatory) | ICFTU IDA | IFAD | IFC | IFRCS (observer) | ILO | IMF IMO | Interpol | IOC | IOM | ISO | ITU | OAS (observer) OPCW (signatory) | OSCE (partner) | PCA | UN UNCTAD |UNECE | UNEP | UNESCO | UNHCR UNIDO | UPU | WB |WCO | WFP | WHO | WIPO | WMO WToO | WTrO |WTO |MIGA 36 *Economic Organizations

37. Relevant Sites Government Institutes: Bank of Israel Central Bureau of Statistics Israeli Government Portal Ministry of Finance Israel Securities Authority Economic News: “The Marker” “Globes” 32

38. We welcome your feedback: Contact: Uri Geva International Affairs Department Ministry of Finance, Jerusalem, Israel urige@mof.gov.il