Israel

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Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of general economic information | Political outline

Economic indicators

Israel has a diversified and technologically advanced economy. After a recession in 2001 and 2002 due to the slowing down of the global economy, an information technology crisis and internal security problems, the Israeli economy re-established itself from 2003. GDP growth rate was high between 2004 and 2007. The country is currently going through a slow economic growth phase which should continue in 2010. The national economy is led by three drivers: a dynamic private consumption, a high level of investment in companies and in R&D and increase in exports. The current account is in surplus. The Government has established a pro-active policy in order to keep the public debt and inflation in check. Israel has one of the highest standards of living in the area. The average salary is also near the European average. Measures have been taken to reduce VAT and taxation in order to maintain domestic consumption. With the economic crisis, the level of unemployment has once again risen in 2009. It is currently neighboring 7%.

Main indicators	2006	2007	2008	2009	2010
GDP (billions USD)	143.98	164.10	201.76e	204.13	204.56
GDP (constant prices, annual % change)	5.2	5.4	3.9e	-1.7e	0.3
GDP per capita (USD)	21,143	23,579	28,365e	28,081e	27,534
General government balance (in % of GDP)	-1.4	-0.8	-2.8	-6.2	-6.6
Inflation rate (%)	2.1	0.5	4.7	1.4e	0.8
Unemployment rate (% of the labor force)	8.4	7.3	6.0	7.5	7.7
Current Account (billions USD)	8.08	4.52	2.33	2.33	0.71
Current Account (in % of GDP)	5.6	2.8	1.2e	1.1e	0.3

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Main sectors of industry

The agricultural sector employs 2% of the population and the country's main crops are fruits and vegetables, cereal, wine and cattle farming.
Israeli companies, especially those in the high technology field, have benefited considerably from funds raised from Wall Street and other financial world markets. In effect, Israel is ranked at 2^nd place, behind Canada, for the number of companies registered on the American stock exchange. High technology industries represent about 40% of the GDP. Other important sectors of activity in Israel are diamond cutting, textile and tourism. Tourism remains significant despite the Israeli-Palestinian conflict. The pharmaceutical sector shows good results as Israel specializes in generic medicines.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Employment by sector (in % of total employment)	2.0	21.7	75.6
Value added (in % of GDP)	-	-	-
Value added (annual % change)	-	-	-

- last available data.

Monetary indicators	2004	2005	2006	2007	2008
Israeli New Sheqel. (ILS) - Average annual exchange rate for 1 USD	4.48	4.49	4.46	4.11	3.59

Source: World Bank - World Development Indicators

Indicator of economic freedom

Score:: 67.6/100
Position:: moderately free
World Rank:: 42 out of 179
Regional Rank:: 2 out of 18

Distribution of Economic freedom in the world
Source: 2008 Index of Economic freedom, Heritage Foundation

Country risk

See the country risk analysis provided by Ducroire.

Foreign trade in figures

The Israeli economy is extremely open. After the global economic recession, imports have increased faster than exports during the beginning of 2008. The trend of an increasing trade deficit accentuated itself. Israel's exports represent around 24% of the GNP. They are the backbone of the country's growth.
The main customers and suppliers of Israel are the European Union, the United States, Turkey, Japan, India and China. Israel's main imported goods are raw materials and half finished products, hydrocarbons, consumption goods (food products and drinks, electrical equipment, transportation equipment, etc.) and investment products. The main national exports are manufactured goods, often high technology (computer equipment, electronic components, aeronautics, electronic communication equipment, verification products and pharmaceutical products).

Foreign trade indicators	2003	2004	2005	2006	2007
Imports of goods (millions USD)	33,294	39,488	43,868	47,125	55,789
Exports of goods (millions USD)	29,918	36,329	39,722	43,278	49,779
Imports of services (millions USD)	11,201	12,822	13,715	14,866	17,842
Exports of services (millions USD)	13,661	16,035	17,447	19,248	21,122
Imports of goods and services (annual % change)	-1.3	11.8	3.5	3.6	11.7
Exports of goods and services (annual % change)	8.0	17.5	4.3	6.1	8.5
Imports of goods and services (in % of GDP)	37.6	41.6	43.2	43.0	44.9
Exports of goods and services (in % of GDP)	36.9	41.6	42.9	43.4	43.2
Trade Balance (millions USD)	-3,376	-3,159	-4,147	-3,847	-6,010
Trade Balance (including service) (millions USD)	-916	54	-415	536	-2,730
Foreign trade (in % of GDP)	74.5	83.2	86.2	86.5	88.0

Source: World Bank

Main partner countries

Main customers (% of exports)	2007
United States	35.0%
Belgium	7.5%
Hong Kong	5.8%
United Kingdom	3.6%
Germany	3.5%
India	3.0%
Netherlands	3.0%
France	2.4%
Italy	2.4%
Turkey	2.2%
Spain	2.0%
China	1.9%
Switzerland	1.9%
Japan	1.4%
South Korea	1.4%
Canada	1.3%
Brazil	1.2%
Cyprus	1.2%
Russia	1.1%
Australia	1.0%
See more countries	44.6%

Main suppliers (% of imports)	2007
United States	13.9%
Belgium	7.9%
Germany	6.2%
China	6.1%
Switzerland	5.1%
United Kingdom	4.7%
Italy	4.1%
Netherlands	3.7%
Japan	3.3%
Hong Kong	3.1%
India	3.0%
Turkey	2.8%
France	2.6%
Russia	2.5%
South Korea	1.7%
Spain	1.4%
Colombia	1.0%
Singapore	1.0%
Sweden	1.0%
Thailand	0.8%
See more countries	60.9%

Source: Comtrade

Main products

Main exports (% of exports)	2007
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	35.1%
Pharmaceutical productsPharmaceutical products	6.4%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	5.5%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	4.7%
Plastics and articles thereofPlastics and articles thereof	4.2%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	4.0%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	2.8%
FertilizersFertilizers	2.1%
Organic chemicalsOrganic chemicals	2.0%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	1.5%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	1.1%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	1.1%
Articles of iron or steelArticles of iron or steel	1.0%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.6%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	0.6%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.5%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.4%
Aluminium and articles thereofAluminium and articles thereof	0.4%
Rubber and articles thereofRubber and articles thereof	0.3%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.3%
Live trees and other plants; bulbs, roots and the...Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage	0.3%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.3%
Iron and steelIron and steel	0.3%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.3%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.3%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	0.3%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.3%
Copper and articles thereofCopper and articles thereof	0.2%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.2%
Other base metals; cermets; articles thereofOther base metals; cermets; articles thereof	0.2%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.2%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.2%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.2%
Glass and glasswareGlass and glassware	0.2%
Sugars and sugar confectionerySugars and sugar confectionery	0.2%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	0.2%
Miscellaneous chemical productsMiscellaneous chemical products	0.1%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.1%
CottonCotton	0.1%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.1%
Works of art, collectors' pieces and antiquesWorks of art, collectors' pieces and antiques	0.1%
Lead and articles thereofLead and articles thereof	0.1%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.1%
See more products	44.1%

Main imports (% of imports)	2007
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	18.4%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	15.8%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	11.0%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	9.2%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	6.2%
Plastics and articles thereofPlastics and articles thereof	3.7%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	3.0%
Organic chemicalsOrganic chemicals	2.7%
Iron and steelIron and steel	2.2%
Pharmaceutical productsPharmaceutical products	1.8%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	1.7%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	1.3%
CerealsCereals	1.3%
Articles of iron or steelArticles of iron or steel	1.2%
Aluminium and articles thereofAluminium and articles thereof	0.9%
Miscellaneous chemical productsMiscellaneous chemical products	0.9%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	0.9%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.9%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	0.8%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.7%
Rubber and articles thereofRubber and articles thereof	0.6%
Copper and articles thereofCopper and articles thereof	0.6%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.6%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.6%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.5%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.5%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.5%
Sugars and sugar confectionerySugars and sugar confectionery	0.5%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.4%
Ceramic productsCeramic products	0.4%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.4%
Meat and edible meat offalMeat and edible meat offal	0.4%
Man-made staple fibresMan-made staple fibres	0.4%
Glass and glasswareGlass and glassware	0.4%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.3%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.3%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.3%
Other base metals; cermets; articles thereofOther base metals; cermets; articles thereof	0.3%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.3%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.3%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.3%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.3%
Beverages, spirits and vinegarBeverages, spirits and vinegar	0.3%
Man-made filamentsMan-made filaments	0.2%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.2%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.2%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.2%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.2%
Pulp of wood or of other fibrous cellulosic...Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard	0.2%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.2%
CottonCotton	0.2%
Photographic or cinematographic goodsPhotographic or cinematographic goods	0.2%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.2%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.2%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.2%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.2%
Clocks and watches and parts thereofClocks and watches and parts thereof	0.2%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.2%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.1%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.1%
Knitted or crocheted fabricsKnitted or crocheted fabrics	0.1%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.1%
Nickel and articles thereofNickel and articles thereof	0.1%
Ships, boats and floating structuresShips, boats and floating structures	0.1%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.1%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	0.1%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0.1%
Products of the milling industry; malt; starches;...Products of the milling industry; malt; starches; inulin; wheat gluten	0.1%
See more products	39.4%

Source: Comtrade

See more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of general economic information

Ministries: Ministry of Agriculture and Rural Development
Ministry of Foreign Affairs
Ministry of Industry and Trade
Ministry of Communications
Ministry of Construction and Housing
Ministry of Finance
Ministry of Tourism
Statistical Office: Central Bureau of Statistics
Central Bank: Bank of Israel
Stock Exchange: Tel-Aviv Stock Exchange
Search Engines: Dapey Reshet
Tapuz
Walla
Economic portals: Port2Port, Israeli Trade Portal

Political outline

Executive Power: The President is Head of the State and he is elected by the Parliament of the country for a seven year term. His role is essentially ceremonial. The President chooses the leader of the party or majority coalition in the parliament to exercise the functions of the Prime Minister, for a four year term. The Prime Minister is head of the government and it is he who holds the executive power, namely the execution of the law and management of current affaire of the country. The Cabinet is chosen by the Prime Minister before being approved by the Parliament.
Legislative Power: The legislative power is Israel is unicameral. The parliament consists of 120 members, elected by universal suffrage universal for a four year term. The parliament can decide to be dissolved by a simple majority, during a censure motion. The Prime Minister cannot directly dissolve the parliament, he cannot veto it. The Israeli citizens have considerable political rights.
Main political parties: The Israeli political system is based on proportional representation, which allows having a system with several parties. No one is in a position to solely assume power,which forces them to cooperate to form coalition governments. The main political parties of the country are :
- Kadima : centrist party, which advocates fixing the borders with the future Palestinian State;
- The Workers Party (Havoda) : left center zionist political party;
- Le Likoud : right nationalist party which draws its roots from the Zionist movement
- Shas : advocates ultra-orthodox Judaism.
Current political leaders: President: Shimon PERES (since July 2007)
Prime Minister: Binjamin NETANYAHU (since March 2009) as head of the coalition government
Next election dates: Presidential: 2014 ; legislative : 2013.

Indicator of freedom of the press

World Rank:: 46/173
Evolution:: 2 places down compared to 2007

Source: Worldwide Press Freedom Index 2007, Reporters Without Borders

Indicator of political freedom

Ranking:: Free
Political freedom:: 1/7
Civil liberties:: 2/7

Map of freedom 2007
Source: Freedom House

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