STATE OF ISRAEL MINISTRY OF FINANCE INTERNATIONAL AFFAIRS DEPARTMENT ECONOMIC HIGHLIGHTS 4th Quarter 2009

Contents Economic Figures Balances International Comparisons Israel and the OECD International Treaties Relevant Sites Contact Us

Economic Figures GDP and Business GDP Major GDP Components Growth: Israel compared to the World Exports of Goods and Services Foreign Investments Unemployment & Participation Rates Inflation Rate Growth of Main GDP Components 2008 Main Economic Indicators Main Trading Partners Inflation Rate Worldwide BACK TO CONTENTS

*Using public exchange rate. ** In current prices Main Economic Indicators CONTINUE Source: Ministry of Finance, IMF

Source: Ministry of Finance CONTINUE Main Economic Indicators

Source: Ministry of Finance Main Economic Indicators CONTINUE

GDP and Business GDP (Annual rate of change (%), in Constant Prices) Q3 Continues the recovery that began in Q2. In the past few years, Israel’s economy has enjoyed high growth rates. Source: Ministry of Finance. CONTINUE

GDP Growth Israel compared to Advanced Economies* (Annual rate of change (%), in constant prices) * Weighted average: US – 39%, Euro area – 46.5%, Japan – 3%, UK – 5%, Asian Newly Industrialized countries – 6.5% Source: Ministry of Finance. Since 2004, Israel’s growth rate has exceeded the average growth rate of advanced economies. CONTINUE

Major GDP Components (Annual rate of change (%), in constant prices) Source: Ministry of Finance CONTINUE

Source: Ministry of Finance Exports of Goods and Services ($B) CONTINUE

Israel’s Main Trading Partners (US$ Billions, excluding diamonds) Source: Central Bureau of Statistics 2008 2007 China is becoming a leading trade partner for Israel CONTINUE

Net Foreign Investments in Israel (B$) Source: Ministry of Finance CONTINUE

Unemployment and Participation (As % of Total Labor Force) 2009 Q3 shows a 0.2% decrease in unemployment Source: Ministry of Finance CONTINUE

Inflation Rate (Rate of Change in CPI, end of year) Source: Central Bureau of Statistics, Ministry of Finance The Consumer Price Index (CPI) grew by 3.8% during 2008. * July 2009 index compared to July 2008 * CONTINUE

Inflation Rate Worldwide (Annual rate of change in CPI, end of 2008) Sources: Ministry of Finance, OECD CONTINUE

Source: Ministry of Finance Growth of Main GDP Components for Previous Year NEXT CHAPTER: BALANCES BACK TO CONTENTS

Balances Budget Deficit and General Government Expenditure Gross Tax Burden Current Account and Net Foreign Debt Gross Public Debt BACK TO CONTENTS

Gross Public Debt (as percentage of GDP) Source: Ministry of Finance Since 2003, the gross public debt has been on a downward trend. CONTINUE

Source: Ministry of Finance Budget Deficit and General Government Expenditure Budget Deficit General Government Expenditure (% of GDP) CONTINUE

Current Account Balance and Net Foreign Debt Source: Ministry of Finance. In 2003, current account turned positive, conversely with the decrease of the net foreign debt. Current Account Surplus (% of GDP) Net Foreign Debt (% of GDP) CONTINUE

Source: Ministry of Finance, OECD Gross Tax Burden (as % of GDP) OECD countries average: 35.8% (2003-2007 as of 2007 average) OECD countries average: 35.2% (2008 average estimated by OECD) NEXT CHAPTER: INTERNATIONAL COMPARISONS BACK TO CONTENTS

International Comparisons NASDAQ and Tel-Aviv 100 (monthly average) Global Competitive Index Central Bank Interest Rates: Israel and U.S.A BACK TO CONTENTS

Central Bank Interest Rates: Israel and U.S.A Source: Bank of Israel (BOI), Federal Reserve Bank of Israel Rate (BOI) U.S. Federal Funds Rate The Bank of Israel was the first in the western world to raise interest since the economic crisis. The rate was raised from 0.5% to 0.75% in September, and from 0.75% to 1% in December CONTINUE

NASDAQ & Tel Aviv 100 (monthly average) Source: Ministry of Finance Tel Aviv 100 corresponds with the NASDAQ to current events CONTINUE

Source: World Economic Forum, Global Competitiveness Index, 2009-2010 Global Competitiveness Index 2009-2010 The World Economic Forum Ranked Israel 27th Out of 134 Countries CONTINUE

Global Competitiveness Index 2009/10 (selected categories, rank circled in red) Source: World Economic Forum, Global Competitiveness Index, 2009-2010 CONTINUE

Source: World Economic Forum, Global Competitiveness Index, 2009-2010 Global Competitiveness Index 2009/10 (selected categories, rank circled in red) CONTINUE

Israel and the OECD Unemployment Rate in 2007-2008 GDP Based on PPP per Capita in 2006 Real GDP Growth BACK TO CONTENTS

Real GDP Growth (Annual percentage of change, partial list) Source: Ministry of Finance, OECD As many OECD countries were highly influenced by the recession in 2008, Israel only experienced a relatively mild decay in growth rate. CONTINUE

Unemployment Rate (harmonized) Source: Ministry of Finance, OECD 2008 2007 2008 2007 2008 2007 2008 2007 CONTINUE

GDP per capita based on Purchasing-Power-Parity (PPP), 2007, current prices in US$ 26,314 Source: Ministry of Finance, OECD NEXT CHAPTER: INTERNATIONAL TREATIES BACK TO CONTENTS

International treaties Avoidance of Double Taxation Agreements Protection of Investments Agreements Cooperation in Industrial R&D Agreements International Organization Memberships Israel’s Free Trade Agreements BACK TO CONTENTS

QIZ Agreements Egypt Jordan Israel’s Free Trade Agreements 1985 1992 1997 1997 1999 2000 2007 USA EFTA Turkey Canada Mexico European Union (association agreement) MERCOSUR (Member states of the common market of the south, not yet in force) CONTINUE Source: Ministry of Finance

Avoidance of Double Taxation Agreements * The agreement with Estonia has only been signed initially CONTINUE Source: Ministry of Finance

* The agreement with Portugal has been recently ratified ** Not yet ratified by South Africa. Avoidance of Double Taxation Agreements CONTINUE Source: Ministry of Finance

Cooperation in Industrial R&D Agreements CONTINUE Source: Ministry of Finance

Protection of Investment Agreements CONTINUE Source: Ministry of Finance

*appending ratification Protection of Investment Agreements CONTINUE Source: Ministry of Finance

Main International Economic Organizations Membership: Israel is a member in leading international economic organizations: WBG IMF WTO OECD (candidate) A more detailed list: 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 NEXT CHAPTER: RELEVANT SITES BACK TO CONTENTS Source: Ministry of Finance

Relevant Sites www.financeisrael.mof.gov.il BACK TO CONTENTS Ministry of Finance International Affairs Website Ministry of Finance Israeli Government Institutions OECD Profile on Israel Bank of Israel (BOI) Central Bureau of Statistics Israeli Government Portal Israel Securities Authority Ministry of Industry, Trade and Labor CONTACT US

WE WELCOME YOUR FEEDBACK Mr. Roni Hershkovitz Acting Director Overseas Economic Information International Affairs Department Ministry of Finance Jerusalem Israel Mr. Assaf Luxembourg Overseas Economic Information International Affairs Department Ministry of Finance Jerusalem Israel START OVER www.financeisrael.mof.gov.il VISIT OUR WEBSITE: financeisrael@mof.gov.il CONTACT US: