Opportunities for Industrial Cooperation in Israel
ECONOMY
Strong Economic Performance Despite Global Recession

Israel's economic performance during the global recession has been among the strongest of any of the developed economies.
With a highly stable financial system and the continuing strength of the economy led by hightech exports, Israel was one of the last developed economies to go into the recession in late 2008 and was one of the first to come out of the recession in the first half of 2009. Israel's economy only contracted in the final quarter of 2008 and the first quarter of 2009. Israel's economy recorded 4% growth in 2008, 0.8% growth in 2009 and is expected to end 2010 with 4% growth. Between 2003 and 2008 Israel's economy grew by 30%.

OECD Membership
The strength of the Israeli economy was given formal recognition in May 2010 when Israel became a member of the OECD.
Virtually every economic indicator has been positive during 2010 compared with the previous year. Inflation was a relatively high 3.9% in 2009 but fell to about 2.4% in 2010 within the government's target range of 0%-3%. Unemployment which was 5.9% in the summer of 2008 climbed to 7.6% in early 2009 but had fallen back to 6.2% by the final quarter of 2010.
Israel's economy is led by exports, which comprise nearly half of GDP. Israeli exports fell from $61.3 billion in 2008 to $47.9 billion in 2009 but had recovered by the second half of 2009, despite the strength of the Israeli currency the shekel. Foreign currency investment in Israel totaled $8.1 billion in 2009. Private consumption was 2.1% in Israel even in 2009 and rose to 5.2% in 2010.
Exports in the first eight months of 2010 totaled $38.9 billion compared with $29.6 billion in the corresponding period of 2009. 34% of exports are to North America, 33% of exports are to Europe, and 23% to Asia. With imports of $38.4 billion in the first eight months of 2010 compared with imports of $29.9 billion in the corresponding period of 2009, Israel has a small positive balance of trade.
Close to half of Israel's exports of manufactured goods involve advanced technology systems but Israel's traditional mid-tech and low-tech industries remain strong. These traditional industries often contain advanced technology processes, which give added value to Israeli diamonds, textiles, food and beverages, automotive products, rubber and plastics, electro-mechanical goods etc as well as defense and homeland security systems.
Nor is Israel's largest industrial manufacturer a classic high-tech firm. Teva Pharmaceuticals, which had 2009 sales of $13.9 billion, is the world's largest producer of generic drugs, although $2.8 billion in sales derives from an ethical drug - Copaxone® - for the treatment of Multiple Sclerosis which is the fruit of Israel's biotech industry. The country's few natural resources - phosphates in the Negev and minerals in the Dead Sea - now earn Israel Chemicals $6 billion in sales per year due to improved extraction processes. Israel has also used technology to overcome the region's water shortages with much of the country's needs now supplied by desalination and recycling of wastewater.
It is high-tech which has led Israel's remarkable economic growth over the past decade. During2009 Israel exported about $20 billion of electronics and software equipment.
Israel's economic success has been based on a highly educated workforce, which also possesses a strong sense of entrepreneurship and ability to adapt to rapidly changing demands. At the same time the government has invested heavily in universities and industrial R&D incentives.

FTAs with the EU and NAFTA
Israel is the only country in the world that has free trade agreements with both the European Union and NAFTA (United States, Canada and Mexico). Israel also has FTAs with Turkey and the MERCOSUR South American countries and is negotiating an FTA with India.
Israel also has bilateral R&D funds with the United States, Canada, UK, Singapore and Korea and is an active member of the Seventh Framework Program for R&D in the European Union. The country also has parallel funding agreements for joint R&D projects with Belgium, Finland, France, Germany, Holland, Ireland, Italy, Portugal, Spain, Sweden, China and Hong Kong, India and Taiwan. Other positive economic indicators include foreign currency reserves which have climbed from $29 billion at the end of 2006 to $66 billion in late 2010. Israel's currency the New Israel Shekel (NIS) has strengthened from NIS4.6/$ in 2006 to NIS3.6/$ in late 2010 and has strengthened similarly against the euro, sterling and other major currencies, reflecting the strength of the Israeli economy. Huge finds of natural gas off Israel's coast in the Mediterranean, which will make Israel a major exporter of energy in the coming years, has also boosted the economy.


Best Performing Stock Market
Israel's Tel Aviv Stock Exchange (TASE) has outperformed almost all other stock exchanges in recent years rising 75% in 2009 and further 50% in 2010 to reach record heights. Privatization has also increased the government's income with the country's national airline El Al, the shipping company Zim, the major banks and oil refineries among the assets sold to private enterprise in the past few years.
All economic forecasters anticipate similar positive figures for the Israeli economy during 2007. The International Monetary Fund (IMF) and Bank of Israel estimates that the Israeli economy will grow an additional 3% in 2011.


Produced By: Daniel Uzan Media & Communications