| COUNTRY PERSPECTIVES
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ISRAEL |
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Country presentation |
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Despite ongoing tension in the region, Israel has evolved in just 20 years from an emerging economy to an industrialised nation. Today it is a regional economic power with GDP of US$ 123.5 billion (NIS 554 billion) recorded in 2005, the equivalent of US$ 158 billion in purchasing power parity according to IMF statistics. |
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Introduction |
Despite ongoing tension in the region, Israel has evolved in just 20 years from an emerging economy to an industrialised nation. Today it is a regional economic power with GDP of US$ 123.5 billion (NIS 554 billion) recorded in 2005, the equivalent of US$ 158 billion in purchasing power parity according to IMF statistics.
After slower growth from 2001 to 2003 (1.3 percent) due to conditions during the second intifada in the Palestinian Territories and the global slump in technology stocks that slowed investment in high-tech companies, significant recovery took place, with GDP growth 4.8 percent in 2004 and 5.2 percent in 2005. The main motors for such strong growth were exports, private consumption, and rapid expansion in high technology industries and tourism. This new positive cycle was favoured by the interest shown by foreign investors.
Services are the engine of Israeli growth, accounting for 77 percent of GDP in 2004 and employing 76 percent of the labour force. These trends are due primarily to a series of reforms and state disengagement from certain activities. From 1986 to May 2005, nearly 90 companies were privatised, notably the national carrier El Al, the maritime company Zim Israel Navigation Co., the telecom operator Bezeq, and the electricity operator Israel Electricity Corporation (IEC). The manufacturing sector, which accounts for 14 percent of GDP and employs 16 percent of the working population, is increasingly specialising on the production of goods with high technological content |
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Strong points |
-Apart from Silicon Valley, the highest concentration of high-tech companies in the world is to be found in Israel, with 4,000 businesses. The country has become a production centre for high tech products, especially software. It is also a leader in the fields of aeronautics, generic drugs, telecommunications and biotechnologies. This phenomenon can be explained first and foremost by the presence of a highly skilled and qualified workforce. There are 135 scientists and engineers for every 100,000 workers, which is the highest proportion in the world. An increasing number of Israeli companies are listed on Nasdaq and in European stock markets.
-A standard of living close to European levels with a monthly income of around €1,400
-External trade which represents nearly 90% of GDP
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Challenges |
-Due to its lack of natural resources, the Israeli economy is heavily dependent on foreign trade. Israel’s two largest trading partners are the United States and the European Union. The global economic downturn that began in 2001 heavily impacted economies dependent on foreign trade and Israel was no exception. However, with the first signs of recovery in the global economy, Israel has reason to be confident that it will receive the positive flow-on effects.
-The domestic security situation over the past three years has been difficult as Israel seeks to sign and ratify peace agreements with its neighbours. It should be noted however that the security situation has not affected the day-to-day running of the industrial and other economic-related sectors.
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References |
| Capital |
Jerusalem |
| Surface area |
21 060 km2 |
| Population 2009 |
7,2 million (IMF) |
| Languages |
Hebrew, Arabic, (English, Russian) |
| GDP in 2009 (US dollars) |
US$ 204 bn (IMF) |
| GDP/per capita (US dollars) |
US$ 28,081 in 2009 (IMF) |
Currency (March 2007)
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Shekel (NIS)
1 Euro = 5.56 NIS – 1 US$ = 4.16 NIS
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| Religion |
Jews (80.1 %), Muslims (14.6 %), Christians (2.1 %), others (3.2 %) |
| National holiday |
May 5 (Independence in 1948) |
| Association Agreement with EU |
Signed on 20/10/1995; implemented on 1/06/2000
EU web site: http://www.delisr.ec.europa.eu/ |
| WTO membership |
Member since 1995 |
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Sources: Annual Report 2005, Bank of Israel; IMF: Conclusions Article IV 2005, Country Report n°06/120, Mars 2006 and World Development Indicators 2006; Central Bureau of Statistics (CBS).
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