Economical presentation sept. 2011

September 2011

The Israeli Economy

• GDP ($Billion) 218• Population (7/2011, Million) 7.8 • GDP per capita ($) 28,575• Foreign Trade (% of GDP) 74% • Total Exports (% of GDP) 37%• Unemployment (Q2/2011) 5.5%

The Israeli Industry• Share of business sector 21% • Industrial Sales ($Billion) 95• Industrial Exports (% of sales) 43% • Employees 350K• Main branches: Chemicals, Electronics & Food2

The Israeli Economy – 2010 Facts & Figures

The Manufacturers' Association of Israel

Israeli Economy

Strengths


3

Rapid Growth in Israeli Economy

4The Manufacturers' Association of Israel

* M.A.I Economic Research Department early estimates.

GDP GDP per Capita Business Sector GDP

4.0%

2.2%

4.5%

0.8%

-0.9%

0.3%

4.8%

2.9%

5.8%

4.5%

2.6%

5%

2011 Est.*

The Israeli EconomyReal Annual Changes

Export Oriented Growth


7%

41%34% 27% 31%

54%62%

80%

102%120%

102%

134% 145%

0%1%

12%

6%4% 4% 11% 15%

26%32%

42%

33%

44% 46%

Jan.-June '11

Industrial ExportsIndustrial Production

Export = 43% of Sales

Export Oriented Growth in IndustryReal Cumulative Rate of Change, Since 1998

Export = 31% of Sales

To Industrial Output To Employment in Industry

To Industrial Export

71%65%

75%

The High Tech Sector Contribution to Industrial Growth in 2004-20

As Percentage of Total Growth

The High Tech Sector Contribution to Industrial Growth

The Manufacturers' Association of Israel 6

2004 – Q2/2011

Including 8/2011))

A Continuous Decrease in Unemployment Rate

7

10.3% 10.7% 10.4%9.0%

8.4%7.3%

6.1%

7.5%6.6%

5.6%

2011 Frcst.

Unemployment RateAs Percent of Civilian Labor Force

The Manufacturers' Association of Israel * M.A.I Economic Research Department early estimates.

Reducing Direct TaxesTax Reform Path


45%

25%

45%

24%

45%

24%

44%

23%

43%

22%

42%

21%

41%

20%

39%

18%

Marginal Income Tax Corporate Tax

World Leadership in Civilian R&D Investments

Source: Israeli CBS The Manufacturers' Association of Israel 9

4.5%4.0%

3.5%3.0% 3.0%

2.1% 2.0%2.0%1.5%

1.0%

Israel is The World Leader in Civilian R&D InvestmentAs Percentage of GDP, 20 9

2010

4.

4%

Global R&D and Innovation Center


High Share of ICT in the Business Sector

ICT= Information & Communications Technologies, 2006

Source: Israeli CBS The Manufacturers' Association of

Israel

11

15.9 14.8

13.7

12.1 10.9 10.8 10.7

9.2 8.7 8.4 8.3 7.9 7.9 7.9 7.6 7.6 7.5 7.5 7.1 7.1 6.9 6.8 6.7

5.0

ICT Sector GDP, Out of The Business Sector GDP 2006

2010

15.7%

Other Asia US EU

23%

15%

28%

34%

23%

18%

26%

32%

Jan. - Jul. 2011

Distribution of export according to areas

Diversion of Trade to Asian Countries


6%5.5%

3%

2%

5.2%

3.7%

Target Deficit Actual Deficit

As percent of GDP

Responsible Fiscal PolicyRestrained Government Budgetary Deficit


13 Source: Ministry of Finance

Relatively Low Government Deficit in Israel

Source: Eurostat, IMF, MOFThe Manufacturers' Association of Israel 14

32.4%

10.6% 10.5% 10.4% 9.5% 9.2% 9.1%7.0%

5.4%4.6% 4.1% 3.7% 3.3% 2.7% 2.5%

0.0%

Israel’s Government Deficit is Relatively LowAs Percent of GDP, 2010

Relatively Low Public Debt Ratio


Source: Ministry of Finance, Eurostat, IMF

15

220.3%

142.8%

119.0%

96.8% 96.2% 93.0% 91.6%83.2% 81.7% 80.0% 76.6% 72.3%

62.7% 60.1% 55.0% 48.4% 43.6% 39.8%

As percent of GDP, 2010

Israeli Economy

Weaknesses


16


Gini Index in the OECD

Source: OECD

0.232

0.312

0.379

0.474

Denm

ark

Swed

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bour

gAu

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Slov

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Czec

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aySw

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land

Icel

and

Fran

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stra

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ECD

Kore

aCa

nada

Spai

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Japa

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New

Zea

land UK Italy

Pola

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USA

Port

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Turk

eyM

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Gini index in the OECD

Isra

el

Standard of LivingRelatively Low GDP Per Capita


44

84

100

138

164

Gross domestic product per capita Index (OECD=100), Based on PPP, 2010

Cost of LivingNumber of Salaries Required to Buy…


Source: BDO, Ziv Hatf, According to an average salary.

11490

79 7160 56 54

30

To Buy an Apartment To Buy a Car*

* Mazda 3

14.211.6

9

5.9 5.4 5.4 5.34.1 3.8

46.3%

60.2%

64.6%

78.9%

Employment RateAs percentage of working age popualtion, 2010

Relatively Low Employment Rate

20The Manufacturers' Association of Israel Source: OECD

Israeli Economy 2012 Forecast


* M.A.I Economic Research Department early estimates.** Bank of Israel Forecast. Aug. 2011.

2011 Est.* 2012 Frcst.**

4.0%

0.8%

4.8%4.5%

3.9%

The Israeli EconomyReal Annual ChangesReal Annual Changes in GDP

http://www.industry.org.il/Eng/


22

Economy & Finance

Economical presentation sept. 2011