Prime Minister’s Office The Israeli Economy: Prospects and Challenges Prof. Avi Simhon, Head of the National Economic Council February 2017
Israel’s GDP per capita is below OECD average 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 0 Mexico Turkey Chile Latvia Greece Hungary Poland Estonia Portugal … Slovak Slovenia Czech Republic Korea Spain Israel Italy New Zealand Japan OECD - Total France … United Finland Canada Belgium Australia Iceland Sweden Source: OECD Germany Denmark Austria Netherlands United States Norway Switzerland 102,200 Ireland Luxembourg
While inequality is relatively high 0.05 0.15 0.25 0.35 0.45 0.1 0.2 0.3 0.4 0.5 0 Iceland Norway Denmark Gini Index for Inequality in OECD Countries (2013) Slovenia Czech Republic Finland Belgium Slovak Republic Austria Netherlands Luxembourg Sweden Germany France Switzerland Poland Korea Ireland Canada Italy Portugal Greece Source: OECD Spain Latvia United Kingdom Israel Estonia Turkey United States Chile
A persistent gap in GDP per capita since 2000 GDP per Capita, Current PPP 40,000 35,800 OECD Israel 19,200 18,800 1994 1997 2000 2003 2006 2009 2012 2015 Source :OECD
Israel’s Debt-to-GDP Ratio Keeps Declining General Government Gross Debt-to-GDP Ratio 130% 117% 111% 96% 93% OECD 88% 73% Israel 78% 62.1% 67% 57% 1990 1993 1996 1999 2002 2005 2008 2011 2014 F 2017 Source: OECD
The Government Becomes Less Involved in the Economy Government Expenditure as % of GDP 51.2% Israel 44.4% 42.6% 41.1% 40.2% OECD 40.1% 39.0% 39.73% 39.26% 2002 2004 2006 2008 2010 2012 2014 E 2016 F 2018 Source: OECD
Unemployment in Israel is at All-Time Low 13% 9% 8% 4.788 1995 1999 2003 2007 2011 2015 Source: OECD
Elite Technology Share in Israeli Export is Growing Israeli Exports* By Technology Intensity, Current US $ (Billions) 90 80 70 60 Other Services ICT and R&D Services 50 High Tech Industry 40 Medium High-Tech 30 Medium Low Tech Low Tech Industry 20 10 0 2005 2010 2015 *Excluding Diamonds and Agriculture Source: Israeli Central Bureau of Statistics
The Israeli Economy Had Undergone Major Shifts During Recent Decades Current Account Balance (% GDP) 6% 4.2% + 4% 2% 0% 2% - 4% - - 5% 6% - 1995 1998 2001 2004 2007 2010 2013 2016 9 Source: Israeli Central Bureau of Statistics
In Recent Decades Israeli Economy Has Become More Integrated Foreign Direct Investment (% of GDP) 12% Net Inflows to Israel 10% Net Outflows From Israel 8% 6% 4% 2% 0% Source: World Bank
The Economy’s Net Assets ($ Millions) Following the structural changes 120,000 – the Israeli economy is rapidly 95624.24 100,000 accumulating foreign assets 80,000 60,000 40,000 20,000 0 20,000 - 40,000 - 60,000 - -51247.3 11 Source: Israeli Central Bureau of Statistics
Israeli High Tech as an Engine for Growth
Big Leap in R&D Expenditure in the 90s (% of GDP) 5.0% 4.5% 4.3% 4.2% 4.0% 3.5% 3.0% 2.5% 2.25% 2.0% 1991 1995 1999 2003 2007 2011 2015 Source: OECD
Israeli Expenditure on R&D is Highest Among OECD Countries Expenditure on Civilian R&D as % of GDP, 2014 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Greece New Zealand Spain Portugal Italy Ireland United Kingdom Norway Iceland Netherlands Czech Republic Australia France United States Belgium Germany Switzerland Sweden Denmark Austria Finland Japan South Korea Israel Source: OECD
The Key to Israel’s Success is its Human Capital Researchers in the R&D sector, per thousand employees, 2012 14 8 OECD Average Israel Source: OECD
Attracting Over 300 Multinational R&D Centers
Many of Which are the Biggest Outside the U.S Source: Innovation Authority
Israel is Hosting a Startup Friendly Ecosystem Global startup Ecosystem ranking (2015): 1. Silicon Valley 2. New York 3. Los Angeles 4. Boston 5. Tel Aviv 6. London 7. Chicago 8. Seattle 9. Berlin 10. Singapore 11. Paris 12. Sao Paulo 13. Moscow 14. Austin 15. Bangalore Source: Compass.co
Israel is Becoming a Major .. In Cyber Industry Number of Active Cyber Companies Active in Israel • Generating 5% of 250 Worldwide Revenues 168 Attracting 10% of • 102 Worldwide Investments 10 1 1 1 1 1 2 2 2 2 2 2 2 2 … … … … … … … … … … … … … Source: The National Cyber Bureau
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