Prime Minister’s Office
The Israeli Economy: Prospects and Challenges Prof. Avi Simhon, Head of the National Economic Council February 2017
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Israel’s GDP per capita is below OECD average 102,200
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Source: OECD
Iceland Norway Denmark Slovenia Czech Republic Finland Belgium Slovak Republic Austria Netherlands Luxembourg Sweden Germany France Switzerland Poland Korea Ireland Canada Italy Portugal Greece Spain Latvia United Kingdom Israel Estonia Turkey United States Chile
While inequality is relatively high Gini Index for Inequality in OECD Countries (2013)
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0
Source: OECD
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
Source :OECD
2015
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 F2017
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
E2016
Source: OECD
F2018
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
50
ICT and R&D Services High Tech Industry
40
Medium High-Tech
30
Medium Low Tech
20
Low Tech Industry
10 0 2005
*Excluding Diamonds and Agriculture
2010
2015
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%6%-
-5% 1995
9
1998
2001
2004
2007
2010
2013
2016
Source: Israeli Central Bureau of Statistics
In Recent Decades Israeli Economy Has Become More Integrated Foreign Direct Investment (% of GDP) 12% 10%
Net Inflows to Israel Net Outflows From Israel
8% 6% 4% 2% 0%
Source: World Bank
The Economy’s Net Assets ($ Millions) 120,000 100,000
Following the structural changes – the Israeli economy is rapidly accumulating foreign assets
95624.24
80,000 60,000 40,000 20,000 0 20,00040,00060,000- -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%
2.0%
2.25%
1991
1995
1999
2003
2007
2011 Source: OECD
2015
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
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%
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 Attracting 10% of 102
Worldwide Investments 10
…1 …1 …1 …1 …1 …2 …2 …2 …2 …2 …2 …2 …2
•
168
Source: The National Cyber Bureau
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