Download Source: Education at a Glance,2007.

The Israeli Economy
Stanley Fischer
Bank of Israel
November 2007
Macroeconomic
Situation
Growth Rate of GDP
2000-2007
%
10
8.9
8
6
5.2
5.3
5.2
5.4
4
2.3
2
0
-0.4
-0.6
2001
2002
BI- Forecast
2007
2006
2005
2004
2003
2000
-2
Rate of Inflation in Last 12 Months
and Inflation Targets, 1992-2007
%
17
Inflation during previous 12 months
Inflation target
15
13
11
9
7
5
3
1
-1
-3
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
01/04
02/04
03/04
04/04
05/04
06/04
07/04
08/04
09/04
10/04
11/04
12/04
01/05
02/05
03/05
04/05
05/05
06/05
07/05
08/05
09/05
10/05
11/05
12/05
01/06
02/06
03/06
04/06
05/06
06/06
07/06
08/06
09/06
10/06
11/06
12/06
01/07
02/07
03/07
04/07
05/07
06/07
07/07
08/07
09/07
10/07
11/07
Bank of Israel Interest Rate, Inflation
Expectations*, and the Fed’s interest Rate,
%
2004-2007
6
Fed's interest rate
5
Bank of Israel interest rate
4
3
2
1
Inflation expectations
0
*For 12 months, as derived from the capital market.
Budget Deficit*
(percentage of GDP, 2000-2007)
%
6
Deficit Target
5
4
5.4
Actual Deficit
4.4
3.9 3.8
3.6
4.0
3.8
3.7
3.4
Under the
2.9 assumption
that the budget
is fully
performed
3.0
3
1.9
1.8
2
1.6
0.9
1
0.7
0.8
0
2000
2001
2002
2003
2004
2005*
2006
2007
*Percent of GDP; excluding credit extended. Until 1996, domestic deficit; from 1997, total deficit.
*The data from 2000 refer to the deficit excluding the Bank of Israel’s profits.
2008
Public Sector Debt,
Percentage of GDP, 2000-2007 (year-end)
%
120
99.8
100
101.7
99.9
95.9
91.9
87.0
86.7
81.5
80
60
40
20
0
2000
2001
2002
2003
2004
2005
2006
2007E
International Aspects
The Nominal and the Real Exchange Rate
1997 - 2007
NIS
5.0
4.8
4.6
4.4
4.2
Shekel / Dollar Exchange Rate
01/01/1997-30/10/2007
4.0
3.8
3.6
3.4
3.2
1/
97
4/
97
7/
9
10 7
/9
7
1/
98
4/
98
7/
9
11 8
/9
8
2/
99
5/
99
8/
9
11 9
/9
9
2/
00
6/
00
9/
0
12 0
/0
0
3/
01
6/
01
9/
0
12 1
/0
1
4/
02
7/
0
10 2
/0
2
1/
03
4/
03
7/
0
11 3
/0
4
2/
04
6/
04
9/
0
12 4
/0
4
4/
05
8/
05
1/
06
6/
0
10 6
/0
6
3/
07
8/
07
3.0
The Real Exchange Rate by Trading Partners
)01/1997-10/2007 ,01/1997=100(
127.2
•A rise in the index indicates depreciation.
•The figure for October 2007 is calculated from spot exchange rates known for the halfmonth, our forecast CPI from the monthly model, and an extrapolation of inflation in
the countries whose currencies are in the currency basket.
•SOURCE: IFS data. For April to October 2007, Bank of Israel calculations.
01
/9
7
07
/9
7
01
/9
8
07
/9
8
01
/9
9
07
/9
9
01
/0
0
07
/0
0
01
/0
1
07
/0
1
01
/0
2
07
/0
2
01
/0
3
07
/0
3
01
/0
4
07
/0
4
01
/0
5
07
/0
5
01
/0
6
07
/0
6
01
/0
7
07
/0
7
135
130
125
120
115
110
105
100
95
90
*The Nis/$ chart is on a daily basis, while the real exchange rate chart is on a monthly basis.
Current Account of Balance of Payments
as Percentage of GDP, 1995-2007* (Annual)
6
5.6
4
3.8
3.3
2.4
2
1.2
-0.8
-1.4
2007E
2006
2005
2004
1996
* Foreign Currency Department forecast
•SOURCE: Balance of Payments, Central Bureau of Statistics.
2003
1995
1999
-5.0
1998
-5.1
1997
-3.1
-4
-6
-1.1
2002
-2
-0.8
2001
-0.9
2000
0
Openness of the Israeli Economy
(percentage of GDP, 1995-2006)
%
48
Imports
Exports
46
44
42
40
38
36
34
32
* Goods and Services.
Source: National accounts, CBS.
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
30
Manufacturing Exports by Technology Intensity
1995
Low
15%
Mediumlow
21%
High
36%
Mediumhigh
28%
2006
Low
7%
High
48%
Mediumlow
18%
Mediumhigh
27%
High-technology Industries: office & computing equipment, electronic components, aircraft, electronic communication equipment,
equipment for control & supervision, pharmaceutical products.
Medium-high-technology Industries: chemicals & refining petroleum, machinery & equipment, electronic equipments & electrical
motors, transport equipment.
Medium-low-technology Industries: mining & quarrying, rubber & plastic products, non-metallic mineral products, basic metals, metal
products, ships & boats, jewelry & silversmiths’, articles n.e.c.
Low-technology Industries: food products, beverages & tobacco, textiles, wearing apparel & leather, paper, printing & wood products.
Source: Foreign Trade, CBS.
Technology-Intensive Exports*
(Percentage of GDP, 1999-2006)
%
18
15.4
16
14
12
13.2
12.5
12.3
12.1
2001
2002
2003
13.9
14.3
2004
2005
10.9
10
8
6
4
2
0
1999
2000
*Including high technology industries and medium-high technology industries
2006
Investment in Israel by Nonresidents
(as percentage of GDP, 2000-2007*)
%
17
15
14
12
11
9
8
6
5
3
2
0
Direct investment
Portfolio investment
8,092
1,615
5,058
75
5,062
2000
3,626
2001
1,812
6,871
723
1,767
2002
3,822
2003
2,041
2004
4,138
14,302
4,878
4,792
2005
2006
Jun 2007
Investment of Israeli Residents Abroad
(as percentage of GDP, 2000-2007*)
%
20
18
16
14
12
10
8
6
4
2
0
Direct investment
Portfolio investment
8,956
8,244
2,149
3,336
2000
1,623
688
2001
2,708
982
2002
3,154
2,065
2003
* Foreign Currency Department forecast
SOURCE: Central Bureau of Statistics, Balance of Payments.
2,381
4,544
2,930
2004
2005
4,458
14,399
4,025
2006
Jun 2007
Financial Markets and
Risk Premium
Ju
n
J u 1,
n 2
Ju 15 006
n ,2
Ju 29 , 006
l 1 20
Au 8 , 06
2
Au g 1 00
g ,2 6
Au 15 00
g ,2 6
Se 29 00
p ,2 6
Se 12 00
p ,2 6
O 26 00
ct , 2 6
O 11 00
ct , 2 6
2 0
N 6 , 06
ov 20
N 9 0
ov , 6
2 20
D 4 , 06
e 2
D c 8 00
ec , 6
2
Ja 22 , 006
n 2
Ja 10 , 006
n 20
2
Fe 5 , 07
2
Fe b 8 00
,
b 2 7
M 23 007
ar , 2
M 12 007
ar , 2
Ap 28 , 007
r 2
Ap 16 007
r ,2
M 30 00
ay , 2 7
M 15 00
ay , 7
2
Ju 30 00
,
n 2 7
Ju 13 00
n ,2 7
Ju 27 , 007
l 1 20
Ju 2 , 07
l 2
Au 30 00
g ,2 7
Au 14 00
g ,2 7
Se 29 00
p ,2 7
Se 14 00
p ,2 7
O 28 00
ct , 2 7
O 12 00
ct , 2 7
26 00
,2 7
00
7
The Share Markets: Israel, the US and the
Emerging Markets,
(1/6/2006=100, 1/6/2006 - 30/10/07)
175
165
95
EM (EMERGING MARKETS) - right scale
155
145
135
125
115
NASDAQ - left scale
105
Israel (Tel Aviv 100) - right scale
85
06
/0
08 3
/0
10 3
/0
12 3
/0
02 3
/0
04 4
/0
06 4
/0
08 4
/0
10 4
/0
12 4
/0
02 4
/0
04 5
/0
06 5
/0
08 5
/0
10 5
/0
12 5
/0
02 5
/0
04 6
/0
06 6
/0
08 6
/0
10 6
/0
12 6
/0
02 6
/0
04 7
/0
06 7
/0
08 7
/0
10 7
/0
7
Israel 5 year Credit Default Swap
6/2003 - 10/2007
140
5yr CDS
120
100
80
60
40
20
17
22
0
Ja
n0
Fe 6
bM 06
ar
-0
A 6
pr
M 06
ay
-0
Ju 6
n0
Ju 6
lA 06
ug
-0
Se 6
p0
O 6
ct
-0
N 6
ov
D 06
ec
-0
Ja 6
n0
Fe 7
bM 07
ar
-0
A 7
pr
M 07
ay
-0
Ju 7
n0
Ju 7
l-0
A 7
ug
Se 07
p0
O 7
ct
-0
7
Israeli Shahar - US Government
10 Year Spread, 1/2006 - 10/2007
%
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
-0.2
Science, Technology &
Education
SOURCE: Central Bureau of Statistics.
ze
ch M
R exi
ep c
ub o
l
Sp ic
ai
G It n
er al
m y
a
Ja ny
C pa
a n
A na
us da
t
B ral
el ia
Po giu
rt m
u
Fr ga
D an l
en ce
m
N ar
o k
O
EC A rwa
D us y
av tr
er ia
N Sw age
et e
he d
rla en
U H n
U ni un ds
ni te g
te d ar
d S y
K ta
in te
gd s
Ire om
la
K nd
o
Fi rea
nl
a
Is Is nd
ra r
el ae
20 l
06
C
ICT value added
as percentage of business sector product
2003
18
16
6
15.716.0
14.9
14
13.2
12
10
8
6.7 6.9 6.9
7.6 7.6
9.1 9.1
8.6 8.8
8.5
8.5
8.4
8.2
8.1
9.8 9.9
11.8
10.510.8
5.7
4.8
4
2
0
SOURCE: Central Bureau of Statistics.
r
N Po eec
ew r e
t
Ze uga
al l
an
Sp d
ai
C
n
ze
I
t
ch Ir al
R ela y
ep n
U
ni
u d
te N bl
d o ic
K rw
in a
gd y
C om
an
A
N us ad
et t a
he ra
rla lia
B nd
el s
av
g
er F ium
a r
U ge anc
ni O e
te E
d CD
S
G ta
er te
m s
A an
D us y
en t
em ria
Ic ark
el
Sw K and
itz or
er ea
la
Ja nd
Fi pan
n
Sw lan
ed d
e
Is n
ra
el
G
National Expenditure on R&D
as percentage of GDP
2005
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
4.4
3.3
0.8
1.0 1.1 1.1
1.3 1.4 1.4
3.5 3.6
2.8 2.9 2.9
2.4 2.4 2.5
2.0 2.1
1.9
1.8 1.8
1.6 1.7 1.7
0.5
Tu
rk
C
ze
e
Sl ch Po It y
ov R r al
ak e tug y
Repub al
pu lic
M bl
e ic
Poxic
H la o
un n
d
A gar
u y
G str
G re ia
e e
O
EC rm ce
F a
LuD a ra ny
v n
N xem era ce
ew b g
Ze ou e
r
Sw ala g
n
itz Sp d
U
ni
er ain
te
d Ir lan
K el d
in an
N S gdo d
et w m
he ed
rla en
Ic nd
B ela s
el n
gi d
u
A Ko m
us re
a
N tral
D orw ia
en
a
U
ni F ma y
te in rk
d lan
St d
a
Ja tes
p
Is an
C ra
an e
ad l
a
Share of the Population Aged 25-64 with
Tertiary-Level Education
2005
50
10
46 46
40
39 40
30
34 35
33
31 31 32 32
30
30
30
28 29 29
27
27
25 25 26
21
20
10
14 15
13
13
12
17 17 18
0
Source: Education at a Glance (OECD), 2007.
Challenges
00 I
00 I I
-I
00 II
-IV
01
01 I
01 I I
-I
01 II
-IV
02
02 I
02 I I
-I
02 II
-IV
03
03 I
03 I I
-I
03 II
-IV
04
04 I
04 I I
-I
04 II
-II
II
05
05 I
05 I I
-I
05 II
-IV
06
06 I
06 I I
-I
06 II
-IV
07
07 I
-II
00
Rate of Unemployment
%
2000.I-2007.II (Quarterly)
12
9
8.9 8.9 8.8 8.8
8.3
7.8 7.7
7.6
6
3
0
SOURCE: Based on Central Bureau of Statistics Labour Force Survey.
Poverty Rate, Relative Measure and a
Constant Basket, 1997-2006
25.0%
23.2%
23.7%
20.0%
20.0%
18.8%
17.5%
15.0%
17.5%
23.8%
21.6%
19.6%
18.8%
17.7%
17.4%
16.9%
16.6%
16.1%
16.1%
15.6%
14.2%
12.7%
13.0%
10.0%
5.0%
Poverty (relative measure)
Poverty (1997 basket)
0.0%
1997
1998
1999
2000
2001
2002
2003
Excluding Jerusalem Arabs.•
SOURCE: Central Bureau of Statistics Income and Expenditure Surveys.
2004
2005
2006
Incidence of Relative Poverty among Individuals,
1997 and 2006a
By education of head of household
60
51.6
1997
2005
50
40
By family size
70
38.5
40
24.2
22.5
30
19.9
13.7
10.911.4
10.2
10
35.6
30.9
26.1
25.4
23.4
20
11.914.0
17.5
10
0
0
0-8
9-10
11-12
13-15
16+
1
By population group
1997
2005
56.1
50
39.3
40
35.9
30
12.3
13.3
10
0
Others
Ultra-orthodox
2-4
5-6
7-8
9+
By number of wage earners
58.8
60
a
51.6
50
34.1
20
20
65.7
2005
60
30
70
1997
Arabs
Excluding Jerusalem Arabs.
SOURCE: Central Bureau of Statistics Income and Expenditure Surveys.
90
80
70
60
50
40
30
20
10
0
78.1
1997
2005
60.1
36.1
20.4
4.5
2.1
0
1
2+
xe
m
rg
35
Ita
bo
u
40
Ic ly
el
a
Po nd
Sw r tu
itz gal
er
la
n
D
en d
m
ar
Sl
ov
G k
ak r e
R ece
ep
ub
li
M c
ex
H ico
un
ga
r
A y
us
tr
C
i
ze
Po a
ch
la
Re nd
pu
bl
ic
O
EC
Sp
D
a
av i n
er
G age
e
U
ni r ma
te
ny
d
St
at
U
ni Au es
te
st
d
ra
K
in lia
gd
om
Is
ra
e
Ja l
pa
n
K
or
ea
Lu
Average Class Size by Level of Education
2005
Primary Education
Lower Secondary Education
30
25
20
15
10
5
0
Source: Education at a Glance (OECD), 2007.
Change in Expenditure on Educational
Institutions for all Services per Student
(Between 1995 and 2004, 1995=100, constant prices 2004)
250
Primary and Secondary Education Institutions*
Tertiary Education Institution
200
150
100
50
w
a
Sw y
ed
te
d
en
Ki
ng
do
De m
nm
ar
k
Cz
Fi
nl
ec
an
h
d
Re
pu
bl
ic
Ja
pa
n
M
ex
Un
ic
ite
o
d
St
at
es
Sp
Ne
ai
th
n
er
la
nd
s
Au
O
s
EC
tra
D
l
av ia
er
ag
e
Sl
Po
ov
rtu
ak
ga
Re
l
pu
bl
i
Hu c
ng
ar
y
Ire
la
nd
Po
la
nd
G
re
ec
e
Tu
rk
ey
Un
i
No
r
Ita
ly
Is
ra
el
G
er
m
an
y
Sw
it z
er
la
nd
0
*incl. Intermediate schools and Pre-Academic Preparatory Courses
Source: Education at a Glance,2007.
Thank you