Saving in Israel

The Israeli economy is a capitalist system modern of a young country and is characterized by a relatively important public sector and a sector of the High-tech in rapid growth. The Israeli companies, mainly in this field, are very appreciated on the world financial markets. Israel is the second country of many companies dimensioned with NASDAQ.

In 2006, American billionaires and tycoons of which Bill Gates, Warren Buffett and Donald Trump rented each one Israeli economic environment.

Some figures

GNP PPP (with purchasing power parity): 177,000,000,000 Dollar S according to the World Bank (2005). The country is with the 47e world rank.

GNP per capita PPP: 31.767 dollars (estimate 2007 of the IMF). The country is with the 18th world rank.

real Increase in the GNP per year: 5,3% (2005), 5,2% (2006), 5,4% (2007 - forecast of the central bank of Israel).

Its unemployment rate is of 7,6% of the active population for the 1st quarter 2007 but it should appreciably drop in the next years. The Activity ratio of the 15-65 years, structurally low for cultural and demographic reasons, reached 55,8% in 2006, against 53,2% in 2003 (for recall the average of the countries of OECD is approximately 65%,60% in France). After violent a recession during the years 2001-2002, the country knows an economic strong growth which reached 4,8% of the GDP into 2004,5,3% in 2005, and 5,2% according to the central Office of the statistics of Israel for 2006, in spite of the war in Lebanon. On first half of 2007, the growth reaches 6,6% in annual rhythm - with the top of the forecasts of the Bank of Israel.

Economic history of the country

First decades

Created in 1948, the independent sources of growth of Israel concern the talent of its human resources which mainly allowed growth rates two digits during the first two decades of existence of the country. The years which followed the Guerre of Kippour in 1973 made lose ten years of growth to the country and involved a Inflation with 3 digits. Starting from 1985, an economic plan of stabilization and reforms in the direction of a market economy revived the economic dynamism and license a new rapid growth in the years 1990.

Years 1990

The waves of massive immigration of the years 1990, with the Aliyah of more than one million highly qualified Jews originating in old the Eastern bloc, gave a new acceleration to the Israeli economy thanks to their labor force and their impact on an increase in consumption.

The israélo-Palestinian Peace process, launched by the Conference of Madrid of 1991 and which led to the Accords of Oslo in 1993 and to the Peace treaty israélo-Jordanian in 1994, largely benefitted the Israeli economy by putting a term at economic insulation from the country and by supporting an regional integration and an opening from the economic relations with its neighbors. That also marked the beginning of an increase in Israeli exports towards the East Asia and the overseas investments in Israel.

In 1998, Tel Aviv is quoted by the magazine Newsweek like one of the 10 most influential cities of the world technologically speaking .

Years 2000

The years 2000 are doubly remembered by the recession of the years 2001-2002 and the strong recovery due to the drastic liberal reforms led by the Minister for Finance Benjamin Netanyahou.

Following the collapse of the bubble high tech and the beginning of the new Intifada, the Israeli economy knows starting from 2001, violent a recession resulting in a retreat of GDP of 0,3% into 2001 and 1,2% into 2002 (in GDP per capita, the retreat cumulated over the two years reaches 6%). Unemployment explodes and approaches fine 2003 the 11%.

Starting from 2003, Benjamin Netanyahou, Minister for Finance of the second government of Ariel Sharon, undertakes a policy of deep reforms, including/understanding a massive fall of the taxes, a recasting of the system of the retirements and health insurance, and especially of the brutal cuts in the budget and in particular in the allowances - the idea being to force people to work.

This plan is a success on the macroeconomic level but, in the short run, it plunges many families (in particular Arab and ultra-orthodoxe) in poverty. The growth starts again as from August 2003 and reaches 1,8% on the whole of the year, then 4,8% into 2004,5,2% in 2005, and 5,1% in 2006. Unemployment falls to 7,7% end 2006, and the activity ratio, structurally low in Israel, increases by 53% has 55,8% at the end of 2006. The rate from public expenditure, which accounted for 77% of the GDP in 1985, and 55% in 2002, fell to 49% in 2006 in spite of the expenditure due to the war in Lebanon. In the same way, the national debt, which culminated at 110% of the GDP in 2002 is gone down again to 85% in 2007, and following the budget surpluses of this same year, should fall to 77% at the beginning of 2008.

In parallel the Israeli Stock Exchange finds as of the end of 2004 its records of the year 2000 and of more than 40% at the beginning of 2006 exceeds them. From 2003 to 2006, the Tel Aviv Stock Exchange indices were multiplied by a factor 3. In February 2007, the Tel Aviv Stock Exchange indices reach the 1000 points, against 100 in 1992.

2006 are also the year of the records of overseas investments with a total of more than 23 billion dollars - including 4 billion for the repurchase ISCAR Metalworking by Warren Buffett, the second richest man of the world; and for the first time of its history, Israel knows a trade surplus which reaches 2,2 billion dollars, and should assemble to 5,3 billion in 2007.

Structure of the economy

Raw materials

The State of Israel is relatively low in natural resources. The smallness of its territory is undoubtedly the cause. Thus, the Hebrew State imports a good portion of its energy consumption (100% of its oil consumption for example) and food. The country also imports great quantities of unworked diamonds (of South Africa in particular) and other industrial products. The country trades mainly with the EU and the USA. But Asia takes more and more weight in the Israeli trade balance.

Primary education

See : Category: The agricultural Community in Israel

2.8% of the GDP of the country comes from the agricultural activity. Israel imports important quantities of cereals but is completely sufficient for the other agricultural produce. Many varieties of citrus fruits (in particular oranges, grapefruits and lemons) are developed by the Israeli producers and constitute the principal exported product (of which oranges of Jaffa for example).

Secondary

The principal sectors of Israeli industry are:

the metallurgy,
the electronics and biomedical components,
the food products,
the chemical products,
the transport facilities,
the Israeli Industrie of diamond is one of the most important centers of the world in the diamond face,
electronic military equipment (Israel is an important exporter of military equipment with a share of 10% of the worldwide market).

Tertiary sector

the service sector is also well represented.
This country is an important tourist destination .
Israel is in particular a country leader in the development of software. It has 4000 start-up, that is to say for 2000 inhabitants. It counts the greatest concentration of engineers in the world: 140 per 10.000 workers, compared with 88 in Japan, 85 in the United States and 60 for Germany.

Economic partners

The United States is the first economic partner of the country with a total of 12,6 billion dollars exchanged for the year 1997: the Americans export there computers, integrated circuits, planes and military equipment, corn and cars towards Israel, while they import cut diamonds, jewels, integrated circuits and material of telecommunication coming from Israel. Since 1985, bilateral agreements of free trade gradually removed the customs taxes between these two countries, for a great number of goods. Israel receives substantial assistances of the the United States, which were about 1,2 billion dollar per annum since the years 1970 and decreased continuously by approximately 120 million dollars per annum since 1998.

Agreements of exchange and co-operation also exist with the European Union and the Canada, and are required with the Turkey, the Jordan and several countries of Europe of the East.

Until the last decade, the exchanges with the Arab world limited to the strict minimum because of the Boycott of the Arab Ligue which not only refused to make trade with this country but also with very undertaken trading with Israel or very undertaken trading with a company which would trade with Israel (boycott with the second and third degrees). ( To read on this subject, the article Office of boycotting of Israel )

References

See too

related Articles

List of Israeli companies

external Bonds

Israel Valley, site on the Israeli French economy
Earths, site on the English economy
The Marker, site on the English economy, of the group Haaretz

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