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

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

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

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  1. STATE OF ISRAELMINISTRY OF FINANCEChief Economist Department – Research, State Revenue & International Affairs Economic Highlights Presentation 1st Quarter 2014 (As of May 1st) 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

  2. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  3. Economic Figures *Using a periodic average exchange rate ** For available months Sources: CBS, IMF

  4. Economic Figures * Data not available at time of publication

  5. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  6. GDP and Business GDP Annual rate of change, constant prices, 2005

  7. GDP Growth Israel compared to advanced economies, annual rate of change, constant prices 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) Source: CBS, OECD, Eurostat, BEA

  8. GDP Components Real Annual Percentage Change Effects of the global economic crisis

  9. GDP per Capita $ U.S, Current prices, Current PPP, 2012 Source: OECD

  10. Output Gap As percentage of Potential GDP, 2013 (based on data last updated 4/12/13) The actual - potential GDP Difference. Positive index means that actual output is higher than potential. * Mainland Norway Additional Sources: OECD Estimates

  11. Stock Exchange Indices Percentage Change, end of period relative to end of previous period Additional Sources: TASE, Bloomberg

  12. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  13. Exports of Goods and Services As a share of GDP Effects of the global economic crisis

  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 Destinations As a share of total exports Source: Central Bureau of Statistics

  16. Current Account Surplus As % of GDP Source: Central Bureau of Statistics

  17. Foreign Investments $ US Billions * In 2006, a large acquisition by Teva Pharmaceutical Industries Ltd. was included in the data. Source: Central Bureau of Statistics

  18. Exchange Rates 31 March 2014 vs 31 December 2013 The change in the specified currency relative to the $ US A decrease means an appreciation of the specified currency relative to the $ US Source: Pacific Exchange Rate Service

  19. Terms of Trade 2005 average = 100 Terms of Trade = Export Prices to Import Prices Ratio Source: Central Bureau of Statistics

  20. Israel’s Free Trade Agreements 1985 USA 2013 QIZ Agreements Colombia* 1998 Jordan 1992 EFTA 2004 Egypt 1997 Turkey 1997 Canada 1999 Mexico 2000 European Union (Association Agreement) 2007 MERCOSUR * Yet to be ratified More comprehensive information is available on the Israel Ministry of Finance website

  21. Bilateral Investment Treaties Cyprus Albania Hungary* Argentina Czech Republic India Armenia El Salvador Kazakhstan Azerbaijan South Korea Estonia Belarus Ethiopia Latvia Bulgaria Lithuania Georgia China Germany Moldova Croatia* Guatemala Macedonia* *Comprehensive information is available on the Israel Ministry of Finance website

  22. Bilateral Investment Treaties Turkey Montenegro Turkmenistan Myanmar** Poland Ukraine Romania Uruguay Serbia Uzbekistan Slovakia Slovenia* South Africa** Thailand *Comprehensive information is available on the Israel Ministry of Finance website ** Yet to be ratified

  23. Economic Organizations Membership 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) More comprehensive information is available on the Israel Ministry of Finance website

  24. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  25. Unemployment and Participation As % 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. Source: Central Bureau of Statistics

  26. Unemployment Rate Latest available data Additional Sources: OECD

  27. Job Creation Change in the number of employees Effects of the global economic crisis Annual average relative to previous year average. * January to February average seasonally adjusted. Source: Central Bureau of Statistics

  28. Employment Rate People aged over 15, latest available quarterly data Additional Sources: OECD, Euro Stat

  29. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  30. General Government Expenditure As % of GDP Source: CBS

  31. General Government Tax Burden As % of GDP Source: Central Bureau of Statistics, OECD

  32. General and Central Budget Deficit As % of GDP Source: CBS, MoF

  33. Public Debt As % of GDP Effects of the global economic crisis Source: CBS, MoF

  34. Public Debt As % of GDP, international comparison Source: CBS, MoF, OECD

  35. Avoidance of Double Taxation Austria Denmark India Belarus Estonia Ireland Belgium Ethiopia Italy Brazil Finland Jamaica Bulgaria France Japan Latvia Canada Georgia China Germany Lithuania Croatia Greece Luxembourg Hungary Malta Czech Republic More comprehensive information is available on the Israel Ministry of Finance website

  36. Avoidance of Double Taxation Mexico Russia Taiwan Singapore Thailand Moldova Slovak Republic Netherlands Turkey Norway Slovenia UK South Africa Ukraine Panama* Philippines South Korea USA Uzbekistan Spain Poland Portugal Sweden Vietnam Romania Switzerland * Yet to be ratified More comprehensive information is available on the Israel Ministry of Finance website

  37. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payment 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  38. Inflation Rate Rate of change in consumer price index Source: Central Bureau of Statistics

  39. Interest Rate Source: Bank of Israel

  40. Central Bank’s Interest Rates International Comparison Source: Specified Countries’ Central Banks

  41. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payments 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  42. Industrial Production Average Annual Growth - 2013 average relative to 2004 average Total industrial production grew by 3.8% Source: Central Bureau of Statistics

  43. Industrial Export Current U.S. $ Billions, and the share of high tech and mid high tech sectors in the Israeli goods exports 83.6% 81% 80% 79.5% 80.4% 77.4% 80.9% 76.6% 76.3% 75.4% 75.4% 72.5% 73.2% Source: Central Bureau of Statistics

  44. Israel is a World Leader in Science, Technology, and Innovation • 1st in R&D expenditure as % of GDP* • 1stin 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* Civilian R&D as % of GDP, 2011 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..” Source: OECD. * International Institute for Management Development (IMD) Global Competitiveness Yearbook 2013. ** World Economic Forum (WEF) Global Competitiveness Report 2013-2014.

  45. Israel in IMD Rankings IMD World Competitiveness Yearbook 2013 (2) USA 1 (3) Switzerland 2 (1) Hong Kong 3 (5) Sweden 4 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. (4) Singapore 5 (8) Norway 6 (6) Canada 7 (16) UAE 8 (9) Germany 9 (10) Qatar 10 (7) Taiwan 11 (13) Denmark 12 (12) Luxemburg 13 (11) Netherlands 14 (14) Malaysia 15 (15) Australia 16 (20) Ireland 17 (18) United Kingdom 18 (19) Israel 19 (17) Finland 20 Source: IMD World Competitiveness Yearbook 2013

  46. Israel in IMD Rankings Israel’s ranking compared to other IMD countries, Economic Performance and Government Efficiency Israel’s ranking compared to other IMD countries, Business Efficiency and Infrastructure Source: IMD World Competitiveness Yearbook 2013

  47. Israel in WEF Rankings World Economic Forum Global Competitiveness Index 2013-2014 The World Economic Forum ranked Israel 27thout 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 Source: World Economic Forum Global Competitiveness Index 2013-2014

  48. Cooperation in Industrial R&D North America New YorkMassachusettsMarylandVirginiaWisconsinColoradoIllinois Oregon BIRD (Foundation)Ontario CIIRDF (Foundation) Europe FranceRussiaItaly ( and Trento county)GermanyGreeceCzech RepublicBulgariaLithuania Slovenia DenmarkHungaryTurkeyPortugalFinlandSwedenIreland Spain Cyprus Netherlands * Through EUREKA (40 country Multilateral Initiative) Asia China (Shanghai, Jiangsu, Shenzhen, Federal)IndiaSIIRD-Singapore (Foundation)KORIL-RDF-Korea (Foundation) South America ArgentinaUruguayBrazil Australia (Victoria) More comprehensive information is available on the Israel Ministry of Finance website

  49. Table of Contents Table of Contents 1 Main Indicators 2 Real Economy 3 Foreign Trade and Balance of Payment 4 Labor Market 5 Fiscal Stance 6 Price Stability and Monetary Policy 7 Innovative Economy 8 Learn More 9 Contact

  50. Learn More Visit the Israel Ministry of Finance English website for more information: About the Ministry Economic Overview of Israel Ministry of Finance publications and reports Other publications and reports on the Israeli economy Ministry press releases

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