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Israel

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EconomicPoliticalStructural

Israel – Quick View
ECR score66.83 (Mar 2011)
ECR rank35 (Mar 2011)
Economic
GDP (2010 Q3)USD 54.64 billion
GNI per capita PPP (2009)USD 27,110
FDI inflow (2009)USD 3,892 million (-64%)
Inflation (2010)2.7%
Central bank assets (2010 Q3)USD 288,257.83 million
Unemployment rate (2010)6.6%8
Government deficit (2010)USD 6,506.27 million
Tax revenue (Nov 2010)USD 60,644.92 million
Political
Government typeParliamentary Democracy
Recent political crisisNA
Economic freedom score (2011)43rd
Freedom of information score (2010)86th
Corruption perception index (2010)30th
Structural
Birth rate21.5 per ‘000
Population balanceUnder 14 – 27.9%
Population balanceOver 65 – 9.8%
Life expectancy yearsMale 79.7 years
Life expectancy yearsFemale 83.5 years
Mortality rate5.2 per ‘000
Literacy rate97%
Internet access71.6%

[Top] Economic Overview

Israel has a technologically advanced market economy with minimum government participation. It depends on imports of crude oil, grains, raw materials, and military equipment. Israel has developed its agricultural and industrial sectors over the past few decades.

Exports were a major driver of the country’s economic growth in the 1990s. In the last few years, the economy has grown by over five per cent annually. The conflict with Hezbollah in 2006 slightly dampened GDP growth, but continuing foreign investment, along with increasing tax revenue and private consumption levels helped the economy recover quickly.

Gross Domestic Product (GDP)

Gross Domestic Product (GDP) in the third quarter of 2010 was NIS 207,637 million.

(Source: Central Bureau of Statistics)

 

Isarel GDP and GDP growth

The country’s GDP at current prices was NIS 768,339 million in 2009, as compared to NIS 725,861 million in 2008. Israel's GDP growth in 2007 was 5.3%, however it dipped to 4.2% in 2008 and further to 0.8% in 2009.

GDP per capita

 

Isarel GDP per capita at market prices

(Source: Central Bureau of Statistics)

The nation’s GDP per capita at constant price was NIS 969,352 in 2009. The GDP per capita at PPP for 2010 was estimated at USD 29,405. The GDP per capita, PPP was USD 28,581 in 2009, as compared to USD 28,715 in 2008.

(Source: Central Bureau of Statistics, dfat.gov.au)

Gross National Income (GNI)

 

Isarel GNI

The nation’s gross national income (GNI) was NIS 750,312 million for 2009, as compared to NIS 711,246 for 2008.

(Source: Central Bureau of Statistics)

GNI per capita

Israel’s GNI per capita in 2009 was 27,110 (measured in current international dollars) as compared to 27,120 in 2008.


Foreign trade

The country’s exports in 2010 (till September) amounted NIS 220,877 million, while imports by the country was NIS 207,671 million.

(Source: Central Bureau of Statistics)

 


Isarel Exports Vs Imports

(Source: Central Bureau of Statistics)

Exports of goods and services by the country for 2009 amounted to NIS 266,254 million (at current prices,) as compared to NIS 290,819 in 2008. The imports in 2009 were valued at NIS 247,508 million, as compared to NIS 301,309 million in 2008.

Israel’s major export destination for 2009 was United States, with 35% of total exports, followed by Hong Kong and Belgium with 6.0% and 4.9% respectively. The United States was also a major source of imports for Israel as it contributed 12.4% of total imports followed by China and Germany contributing 7.4% and 7.1% respectively.

(Source: dfat.gov.au)

Taxes in Israel

Israelis pay tax on all sources of income in the country and abroad. Individual income tax in 2010 ranged from 10% to 45%.

 

Income (NIS)

Tax %

1-57,240

10%

57,241-101,640

14%

101,641-152,640

23%

152,641-219,000

30%

219,001-472,080

33%

472,081 and over

45%

(Source: Worldwide-tax)

 Corporate tax in the country was fixed at 25% in 2010, which also includes income tax.

 Social Security taxes in Israel are subject to a monthly payment of NIS 76,830.

(Source: Worldwide-tax)

Inflation rate

Inflation rate in Israel for 2010 was 2.7%,decreasing from the inflation of 3.3% in 2009.

Isarel Inflation rate

 

(Source: Central Bureau of Statistics, Central Bank of Israel)

The inflation in the year 2011 is forecasted to be 2.8%, according to International Monetary Fund and Economist Intelligence Unit.

FDI inflow

In 2009, Foreign Direct Investment (FDI) inflow was USD 3,894 million, as compared USD 10,877 million in 2008. The FDI inflow into the country in 2009 decreased by 64.2% from the previous year.


Isarel FDI

(Source: Central Bureau of Statistics)

Banking sector assets

The table below displays the assets of the Central Bank of Israel.

Currency Unit: New Israeli Shekel (NIS)

Summary consolidated balance sheet (NIS million)

End of Period

2010 (Q3)

2009

2008

2007

Cash and deposits in banks

125,459

160,785

125,978

125,733

Securities

154,717

150,871

137,475

170,138

Securities borrowed or purchased under agreements to resell

-

3,488

1,435

2,291

Credit to the public

756,807

721,960

732,428

663,282

Credit to the government

2,298

2,973

2,283

1,425

Investments in companies included on an equity basis

3,970

4,490

4,548

4,908

Buildings and equipment

13,585

13,856

13,554

12,705

Other assets

35,716

29,955

44,533

26,493

Total assets

1,095,485

1,088,378

1,062,234

1,006,974

(Source: CentralBank of Israel

[Top] Financial Indicators & Government Financial

Consumer price index (CPI)

Consumer price index for January 2011 (base, year 2010 = 100) was 102.0. Percentage change of CPI over previous month was 0.2%.

(Source: Central Bureau of Statistics)

 

Isarel CPI

Base, Year 2006 = 100

(Source: Central Bureau of Statistics)

Wholesale Price Index

Isarel WPI

Base, Year 2005 = 100

(Source: Central Bureau of Statistics)

Interest rates

In December 2010, the Bank of Israel offered an interest rate of 1.99%.

 

Average interest on deposits in Bank of Israel

Period

Interest rate

1/2010

1.25

2/2010

1.25

3/2010

1.25

4/2010

1.5

5/2010

1.5

6/2010

1.5

7/2010

1.5

8/2010

1.75

9/2010

1.75

10/2010

1.95

11/2010

1.99

12/2010

1.99

(Source: Central Bank of Israel)

Money supply (currency in circulation)

According to the Central Bank of Israel, money in circulation at the end of November 2010 was NIS 113,769.4 million.

 

Isarel Money supply

(Source: Central Bank of Israel)

 Government expenditure

Government expenditures in Israel for 2009 was NIS 330,074 million, exceeded its revenue, creating  current deficit of NIS 22,387 million, as compared NIS 4,643 million in 2008.

Expenditure of Government of Israel (NIS million)

 

2009

2008

Total Expenditure

330,074

312,375

Consumption expenditure

185,501.6

179,615.6

Interest on the public debt

28,056.29

26,239.5

Subsidies

6,271.41

5,622.75

Current transfers to households and private non-profit institutions

80,207.98

73,408.13

Capital transfers to private sector

16,173.63

14,369.25

Gross capital formation

13,533.03

13,119.75

(Source: Central Bureau of Statistics)

 

Government Expenditure by function, 2009 (NIS million)

 

%

Social protection

27.7

Education

16.4

Defence

15.1

Health

10.7

Interest payments

8.5

General services

and public order

8.2

Economic affairs

7.2

Others

6.1

 
(Source: Central Bureau of Statistics)

Official exchange rate

NIS per dollar for 2010 was registered at 3.73.

Isarel Exchange rate

 

(Source: Central Bank of Israel)

Government finances

Fiscal balance

Isarel Fiscal balance

 

(Source: Central Bank of Israel)

Fiscal deficit for 2010 was NIS 24,304.43 million, compared to NIS 33,925.76 million in 2009.

Total revenue

The country's revenue in 2009 was recorded at NIS 295,444 million, decreasing 0.8% from the 2008 figure of NIS 297,586 million.

Revenues of Government of Israel (NIS million)

 

2008

2009

Total Revenue

297,586

295,444

Property and entrepreneurial income

9225.16

12704.09

Taxes, fees and levies

205036.8

199720.1

National Insurance contributions and other transfers from the private sector

50589.62

51702.7

Transfers from abroad

15474.47

13885.87

Imputation for consumption of fixed capital

10415.51

10635.98

Capital transfers from private sector

6546.9

6499.77

Capital transfers from abroad

595.17

295.44

(Source: Central Bureau of Statistics)

 Tax revenue

Tax revenues in Israel, at the end of November 2010, were NIS 221,079.0 million, which is an increase of 10.4% over the previous year.

Tax Revenues And Transfer Payments From The Public (NIS million)

 

2009

2010 (till November)

Direct taxes and National Insurance payments

123,868.7

122,953.6

Indirect taxes on domestic production

76,104.1

78,158.9

Taxes on civilian imports

22,433.4

23,051.4

Transfer payments from the public

4,651.5

5,887.8

Total

218,207.6

221,267

(Source: Central Bank of Israel)

Current account balance - surplus/deficit

Israel has registered a current account surplus for each year since 2003.  

Isarel Current account balance

(Source: Central Bureau of Statistics)

Balance of payment

Balance of Payment (USD million)

 

2010 (Jan to Sept)

2009

Q1

Q2

Q3

Q1

Q2

Q3

Q4

Current account balance

1,972

2,404

910

2,388

1,516

88

3,600

Capital balance

226

236

220

222

206

243

237

Financial account

2,380

5,946

1,220

2,334

2,318

2,814

3,446

(Source: Central Bureau of Statistics)

[Top] Labour Force and Employment Overview

Labour force in Israel was recorded at 3.01 million people in 2009, increasing by about 2% from the previous year’s labour population. Specifically, females accounted for about 51.9% of the total labour force in 2009, while males accounted for 61.6%.

(Source: Central Bureau of Statistics)

 

Industry

Employed Persons (%)

Electricity and water

0.6

Banking

3.3

Public administration

4.1

Manufacturing

12.5

Transportation

5.8

Business Activities

17.8

Trade and repairs

14.0

Construction

4.6

Health, welfare and social work services

10.9

Education

13.5

Community services

5.6

Agriculture

1.8

Accommodation services and restaurants

5.4

Total

100

(Source: Central Bureau of Statistics)

In 2009, the total number of employed people was 2.786 million, increasing by 9,200 people over the previous year. 

(Source: Central Bureau of Statistics) 

Unemployment

7.1% of total labour force was unemployed in 2009 as compared to 6.6% in 2008.

(Source: Central Bureau of Statistics) 

 

Isarel Unemployment rate

(Source: Central Bureau of Statistics)

The total labour force participation rate in Israel was 56.6% for 2009. Specifically, for females, the participation rate was 52%, while for males it was 61.5%.

(Source: Central Bureau of Statistics)

Minimum wage

Minimum wages in 2010 were NIS 3,850 per month, but they are expected to rise to NIS 4,100 in July 2011, and to further rise to NIS 4,300 by October 2012.

(Source: Bloomberg, Central Bureau of Statistics)

 Level of unionisation

Organised labour in the country belongs to numerous trade unions. The majority of the trade unions belong to New Histadrut consisting of more than 700,000 members. The National Workers' Organisation has more than 300,000 members. The other active unions, which are not affiliated to Histradut, include the Teachers’ Organisation (Irgun Hamorim) and the Israeli Medical Association (Hahistadrut Harefuit).

Of the total labour force in Israel, approximately 40% are members of trade unions.

(Source: organization.haifa.ac)

[Top] Political Stability

Government

 Israel is a parliamentary democracy. The Parliament is made up of 120 members elected every four years on the basis of proportional representation and is called The Knesset.

The Prime Minister is a member of the Knesset. Suprisingly, no Israeli political party has ever won an absolute majority in the Knesset.

The President is the Head of State, and has a largely ceremonial role. He is elected by a secret Knesset vote for a single seven-year term.

Israel does not have a written constitution, but a series of Basic Laws. The law stipulates that elections should be held every four years.

Shimon Peres is currently the President,as of February 2009, with Benjamin Netanyahu as the Prime Minister.

The major political parties in Israel include:

  • Kadima
  • Likud
  • Yisrael Beitenu
  • Labor
  • Shas

(Source: Knesset)

Israel economic freedom score in the 2011 Index of Economic Freedom is 68.5, making its economy the 43rd freest globally. In the Middle East/North Africa region, Israel ranks 5th out of 17 countries. Israel’s overall score is higher than the global and regional averages.

Corruption perception

The Corruption Perceptions Index (CPI) is a survey to measure the perceived level of corruption across countries worldwide. Israel is ranked 30th on this list, indicating low corruption levels in the public departments in the country, especially as compared to neighbouring nations such as  Lebanon, Syria and Jordan.

Israel had the same score in the 2009 index, however, it has climbed on the CPI rankings since 2009, when it was ranked 32nd.

(Source:transparency.org)

Freedom of information

Early Israeli newspapers were affiliated to the political parties that determined their agenda. During the Lebanon war in 1982, the press criticised the government freely while reporting continuous and critical information about the war to public.

The daily newspapers and other forms of Israeli media deal with fundamental issues and also monitor the government and provide comprehensive political information to their audience.

The country has 13 daily newspapers and about 90 weeklies.

(Source: BBC)

World Press Freedom Index 2010 ranks Israel at 86th rank with a score of 23.25, indicating restrictions or censorship on the media in Israel.

(Source: rsf.org)

Newspapers

  • Yediot Aharonot
  • Ha'aretz
  • Jerusalem Post
  • Ma'ariv
  • Globes

Judicial system

The Organization of the Courts of Law is managed by the Directorate of Courts, which is headed by the Director of Courts. Additonally, the President of the Supreme Court of Law and the Minister of Justice are in-charge of the judicial system.

Different courts of Law under the Organization of Courts in Israel include:

  • The Supreme Court
  • The District Courts of Law
  • Magistrates Court - Court of Traffic Offenses, Family Courts and Juvenile Courts
  • National Labor Court
  • Regional Labor Courts

The judiciary system in the country acts as a guardian of the law and of individual rights.  The system is classified into two main types:

  • The general law courts which are known as civil or regular courts.
  • Tribunals and other authorities with judicial powers

The Supreme Court of country also acts as the High Court of Justice. This particular function is unique to the nation as the court acts as a court of first and last instance.

 

(Source: Ministry of Foreign Affairs)

[Top] Demographic Overview

Population

The total population of Israel at the end of November 2010 was 7.7 million.

(Source: Central Bureau of Statistics)

According to the Central Bureau of Statistics, the population is expected to cross the 10 million mark in the year 2030.

 

 

Isarel Population by gender

 

Gender ratio

The gender ratio in the country is almost balanced, there are about 98.4 males for every 100 females in the country.

(Source: Central Bureau of Statistics, UN)

In 2009, the population below 14 years of age constituted 27.9% of the total population, and 9.8% were above the age of 65.

Mortality rate

The country registered an infant mortality rate (per 1,000 live births) of 4.7 in 2009. The mortality rate for females from 2005 to 2009 was recorded at 5.4 deaths, compared to 5.5 male deaths. Furthermore, the average life expectancy in 2009 for men was 79.7 years and for females it was 83.5 years.

(Source: Central Bureau of Statistics)

Birth rate

The birth rate in the country was 22 births per 1000 in 2009.

(Source: World Bank)

Median age

The median age of country for 2009 was 29.3.

Migration and urbanisation

International migrant stock, till mid 2010, was recorded at 2,940,500 people, or 40.4% of the entire population.

(Source: UN, Central Bureau of Statistics)

The number of people living in urban localities in 2009 was 6.9 million people, or more than 90% of the total population.

According to figures from the United Nations, the country’s urban population grew at an annual rate of 1.7% between 2005 and 2010. Alternatively, in the same period, the rural population grew at a rate of 1.4% per year.

(Source: UN,Central Bureau of Statistics)

Ethnicity

Major ethnic groups in Israel are:

  • Jews 80%
  • Arabs 20%

(Source: Central Bureau of Statistics)

Human Development Index (HDI)

The country ranks 15th out of 169 countries on the Human Development index 2010 conducted by the United Nations. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income). 

(Source: UNDP)

[Top] Soft Infrastructure

Education

Literacy rate in the country is estimated to be 97%.

  • Education is a fundamental value in the country and is recognized by the government as a key to the future.
  • The educational system is based on Jewish values
  • The education system consists of three main tracks – State Education, State Religious Education, and Independent Education

A separate educational structure is maintained for Arab students, though some Arabs study in the Jewish system.

The curriculum throughout the Israeli educational system is centralized through the Ministry of Education and Culture. The language of instruction in Jewish Schools is Hebrew and Arabic in Arab schools.

The free compulsory education law (1979) provides compulsory and free education to children between five and sixteen. Furthermore, education for children above the age of sixteen is free but not compulsory.

Healthcare

The healthcare system in Israel includes a high standard of health services, medical technology and research. The country has modern hospital facilities and an impressive ratio of physicians to population. The Ministry of Health is responsible for the development of health policy, the government’s health care budget and operation of the public health services.

Isarel Total no. of hospitals

(Source: Central Bureau of Statistics)

The country had 371 hospitals in 2009, of which the majority were private.

The leading causes of death in Israel include cancer, heart disease, diabetes, disease of the respiratory system and cerebro-vascular diseases.

Isarel Total expenditure on health

 (Source: Central Bureau of Statistics)

The expenditure on health in 2009 was NIS 55,356 million, amounting to 7.9% of the GDP.

[Top] Hard Infrastructure

Mass public transit

 

Israel Road Network, 2009

Total Road Length

18,290

Non-urban roads

6,490

Access roads

1,619

Urban roads

10,181

(Source: Central Bureau of Statistics)

Railways

The total length of railway lines in the country in 2009 was 960 km.

(Source: Central Bureau of Statistics)

Ports

Major ports in Israel are:

  • Port of Ashdod
  • Port of Ashkelon
  • Port of Eilat
  • Port of Hasdera
  • Port of Haifa

(Source: world port source)

Airports

Major airports in the country include:

 

Town

Airport name

Runway length

Arad

Arad

4500 ft

Eilat

Eilat

6200 ft

Eyn-Shemer

Eyn-Shemer

5400 ft

Jerusalem

Jerusalem

6400 ft

Meggido

Meggido Mil

7700 ft

Ovda

Ovda Ab

9800 ft

Tel Aviv

Ben Gurion

11900 ft

Tel Aviv

Sde Dov

5700 ft

(Source: Air charter world)

Telecommunications networks

In 2009, the country had 125.84 mobile subscribers per 100 people.

(Source: ITU)

In 2010, 7.35 million people, 71.6% of the total population, used internet services. While in 2000, the number of internet users accounted for only 18.2% of total population.

 

Isarel Internet users and growth

 

(Source:internetworldstats.com)

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