Real GDP growth for the first half of 2007 was 6.6%, 2.5 times more than the average in OECD countries (2.7%).
(Communicated by Israel’s Ministry of Finance, International Affairs Department)
Economic highlights for first half of 2007:
- Real GDP growth for the first half of 2007 was 6.6%, up from 5.1% in 2006 and 5.2% in 2005. At this rate, the Israeli GDP growth between 2004 and 2007 will reach more than 20%.
- GDP growth is 2.5 times more than the average in OECD countries (2.7%) and is expected to reach 5.4% for 2007.
- GDP per capita based on PPP (purchasing power parity): $27,688 (21st among OECD members)
- Private consumption per capita, indicating the quality of life, grew by 4.6%.
- Unemployment dropped another 0.1% from 7.7% (1st quarter) to 7.6% (2nd quarter), while the rate of employed persons (15 and up) grew from 56.1% to 56.6%.
- The Consumer Price Index increased by 2.8% (Jan-Aug). In accordance with the economic policy to restrain CPI change to between 1% and 3% annually, BOI rate has been raised to 4.0% to set inflation within the target zone for 2008.
- For the 1st half of 2007, investment in fixed assets increased by 11.4% while total gross investment increased by 9.3%.
- Foreign Trade: 6.3% increase in exports of goods and services.
- Foreign investments: Jan-Aug 2007: $10.6 billion; total for 2006: $24.4 billion (including TEVA-Ivax deal).
- Foreign direct investments in 2007 are expected
to grow by 8.0%, reaching $15.3 billion.
Economic growth (1st half of 2007):
- Real GDP: +6.6% (+3.4% in the 2nd half of 2006)
- Business GDP: +7.9% (+3.2% in the 2nd half of 2006)
- Private consumption : +4.6% (+3.7% in the 2nd half of 2006)
- Exports (goods & services): +6.3% (+3.8% in the 2nd half of 2006)
- Investment in fixed assets: +11.4%
- Consumption of durable goods: +34.6%
- Total private consumption: +6.2%
- Israeli start-up companies raised $319 million in the 2nd quarter of 2007, a 4% increase from the previous quarter.
- Israel’s current long-term foreign currency ratings are at:
S&P: A-; Moody’s: A2; Fitch: A-
- The IMD has ranked Israel first out of 55 ranked in R&D expenditure, both public and private.
- The World Bank will sell up to $1 billion of its bonds in Israel, in shekels. Its bonds are sold worldwide in only 30 countries.
- The USA and Israel have signed an agreement granting Israel $30 billion for defense purposes over a period of 10 years.
- Tax on apartment purchase was lowered substantially.
The 2008 state budget has been approved by the government,
presented to the Knesset and is now awaiting first reading.
- Total expenditure without disengagement and northern conflict costs will rise as planned by 1.7% (same rate as population growth).
- Education reform: additional working hours for school teachers and additional authorities for principals. As for higher education: wide reform in order to bring back Israeli scientists who are abroad and improvement of research quality using grants and a quality assurance system.
- Promotion of competition in the cellular communications,
electricity, public transportation and gas markets.
- Promotion of competition in the health industry, establishing a 5th health-care authority.
- Integrating working mothers in the labor force by expanding daycare facilities and further subsidizing according to income.
- Maintain the budget framework, implementing responsible fiscal policy
- Narrow socio-economic gaps and rduce poverty
- Continue to reduce the ratio of public debt (87.7% in 2006) to GDP
- Reduce the rate of unemployment (in a downtrend – 7.6% in the 2nd quarter of 2007, the lowest in 10 years – but still a challenge)
- Increase participation rate in labor force
- Continue reforms, such as reducing corporate tax, reducing the tax burden on low and medium income levels, extending pension benefits, and continuing privatization
Sources: Ministry of Finance, Central Bureau of Statistics, Bank of Israel, Israel Venture Capital, Bank Leumi, Israel Export Institute.