Israel Hi-Tech Conference 2007

June 2007

2

Growth Rate of GDPGrowth Rate of GDP2000-20072000-2007%

8.7

-0.6 -0.9

1.5

4.85.2 5.1 5.1

-2

0

2

4

6

8

10

2000

2001

2002

2003

2004

2005

2006

2007

BI - Forecast

3

Rate of Inflation in Last 12 Months, Rate of Inflation in Last 12 Months, and Inflation Targets, and Inflation Targets, 1992-20071992-2007

-3

-1

1

3

5

7

9

11

13

15

17

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Inflation during previous 12 months

Inflation target

%

4 *Percent of GDP; excluding credit extended. Until 1996, domestic deficit; from 1997, total deficit. The data from 2000 refer to the deficit excluding the Bank of Israel’s profits.

%

3.6

1.8

3.9 4.03.8

3.4

3.0 2.9

0.7

4.4

3.8

5.4

3.7

1.9

0.9

1.5

0

1

2

3

4

5

6

2000 2001 2002 2003 2004 2005* 2006 2007

Deficit Target

Actual Deficit New Definition

Budget Deficit** (percentage of GDP, 2000-2007)

5

Current Account of Balance of PaymentsCurrent Account of Balance of Payments(Percent of GDP, Annual)

-5.0

-3.0

-0.7 -0.6

1.4

2.62.9

-1.0-5.0

-5.0

-1.1

4.9

-6

-4

-2

0

2

4

6

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

6

Level of Openness of Israeli Economy: Exports and Imports(percent of GDP, 1995-2006)

20

25

30

35

40

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

ImportsExports

•Goods and services excluding diamonds.

•SOURCE: National Accounts, Central Bureau of Statistics.

7

1995High36%

Medium-high28%

Medium-low21%

Low15%

Manufacturing Exports by Technology IntensityManufacturing Exports by Technology Intensity

High-technology Industries: office & computing equipment, electronic components, aircraft, electronic communication equipment, equipment for control & supervision, pharmaceutical products.

Medium-high-technology Industries: chemicals & refining petroleum, machinery & equipment, electronic equipments & electrical motors, transport equipment.

Medium-low-technology Industries: mining & quarrying, rubber & plastic products, non-metallic mineral products, basic metals, metal products, ships & boats, jewelry & silversmiths’, articles n.e.c.

Low-technology Industries: food products, beverages & tobacco, textiles, wearing apparel & leather, paper, printing & wood products.

2005Low8%

Medium-low19% Medium-

high27%

High46%

2006 Low7%

Medium-low18%

Medium-high27%

High48%

8

Investment in Israel by Nonresidents(as percentage of GDP, 2000-2006)

Investment of Israeli Residents Abroad(as percentage of GDP, 2000-2006)

02468

101214161820

2000 2001 2002 2003 2004 2005 2006*

Direct investment Portfolio investment

0235689

1112141517

2000 2001 2002 2003 2004 2005 2006

Direct investment Portfolio investment

SOURCE: Central Bureau of Statistics, Balance of Payments.

%

%

8,587

14,150

4,754

4,5556,871

2,0843,868

1,812

1,767

7233,626

755,062

5,058

8,791

13,6338,208

3,3234,544

2,376

2,0653,154

2,708982

1,623688

2,1493,336

9

ICT Value Added ICT Value Added as percentage of business sector product as percentage of business sector product

20032003

4.85.7

6.7 6.9 6.97.6 7.6

8.1 8.2 8.4 8.5 8.5 8.6 8.8 9.1 9.19.8 9.9

10.510.811.8

13.2

14.9

16.5

0

2

4

6

8

10

12

14

16

18

Source: CBS.

10

National Expenditure on R&D National Expenditure on R&D as percentage of GDPas percentage of GDP

20032003

0.60.9 1.0 1.1 1.1

1.31.6 1.6 1.6 1.7

1.9 2.02.2 2.2

2.5 2.6 2.6

3.1

3.53.7

4.5

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Source: CBS.

11

Share of the Population Aged 25-64 with Share of the Population Aged 25-64 with Tertiary-Level Education Tertiary-Level Education

20042004

11 12

2124 25 25 26

28 28 29 29 30 31 3234 35

3739

45 45

0

10

20

30

40

50

Source: Education at a Glance,2006.

12

Change in Expenditure on Educational Institutions for all Services per Student

(Between 1995 and 2003, 1995=100, constant prices 2003)

0

20

40

60

80

100

120

140

160 Primary and Secondary Education Institutions*

Tertiary Education Institution

Source: Education at a Glance,2006.

*incl. Intermediate schools and Pre-Academic Preparatory Courses

13

IsraelMiddle East & North AfricaGNI per capita (US$)18,620

Ease of doing business (rank)26High incomePopulation (m)6.9

Starting a business (rank)15Registering property (rank)150Trading across borders (rank)13

Procedures (number)5Procedures (number)7Documents to export (number)5

Time (days)34Time (days)144Time to export (days)15

Cost (% of income per capita)5.1Cost (% of property value)7.5Cost to export (US$ per container)340

Minimum capital (% of income per capita)0.0Getting credit (rank)7Documents to import (number)5

Dealing with licenses (rank)101Strength of legal rights index (0–10)8Time to import (days)16

Procedures (number)21Depth of credit information index (0–6)5Cost to import (US$ per container)700

Time (days)215Public registry coverage (% of adults)0.0Enforcing contracts (rank)110

Cost (% of income per capita)91.1Private bureau coverage (% of adults)100.0Procedures (number)31

Employing workers (rank)82Protecting investors (rank)5Time (days)585

Difficulty of hiring index (0–100)0Extent of disclosure index (0–10)7Cost (% of claim)22.1

Rigidity of hours index (0–100)60Extent of director liability index (0–10)9Closing a business (rank)36

Difficulty of firing index (0–100)20Ease of shareholder suits index (0–10)9Time (years)4.0

Rigidity of employment index (0–100)27Strength of investor protection index(0-10)8.3Cost (% of estate)23

Nonwage labor cost (% of salary)6Paying taxes (rank)62Recovery rate (cents on the dollar)43.9

Firing cost (weeks of salary)91Payments (number per year)33

Time (hours per year)225

Total tax rate (% of profit)39.1

Source: “Doing Business 2007”, a Copublication of the World Bank and the International Finance Corporation.

14

Israel/SingaporeMiddle East & North AfricaGNI per capita (US$)18,62027,490

Ease of doing business (rank)261High incomePopulation (m)6.94.4

Starting a business (rank)1511Registering property (rank)15012Trading across borders (rank)

134

Procedures (number)56Procedures (number)73Documents to export (number)

55

Time (days)346Time (days)1449Time to export (days)156

Cost (% of income per capita)5.10.8Cost (% of property value)7.52.8Cost to export (US$ per container)

340382

Minimum capital (% of income per capita)

0.00.0Getting credit (rank)77Documents to import (number)

56

Dealing with licenses (rank)1018Strength of legal rights index (0–10)89Time to import (days)163

Procedures (number)2111Depth of credit information index (0–6)54Cost to import (US$ per container)

700333

Time (days)215129Public registry coverage (% of adults)0.00.0Enforcing contracts (rank)

11023

Cost (% of income per capita)91.122.0Private bureau coverage (% of adults)100.038.6Procedures (number)3129

Employing workers (rank)823Protecting investors (rank)52Time (days)585120

Difficulty of hiring index (0–100)00Extent of disclosure index (0–10)710Cost (% of claim)22.114.6

Rigidity of hours index (0–100)600Extent of director liability index (0–10)99Closing a business (rank)

362

Difficulty of firing index (0–100)200Ease of shareholder suits index (0–10)99Time (years)4.00.8

Rigidity of employment index (0–100)

270Strength of investor protection index(0-10)

8.39.3Cost (% of estate)231

Nonwage labor cost (% of salary)613Paying taxes (rank)628Recovery rate (cents on the dollar)

43.991.3

Firing cost (weeks of salary)914Payments (number per year)3316

Time (hours per year)22530

Total tax rate (% of profit)39.128.8

15

Israel/IrelandMiddle East & North AfricaGNI per capita (US$)18,62040,150

Ease of doing business (rank)2610High incomePopulation (m)6.94.2

Starting a business (rank)156Registering property (rank)15080Trading across borders (rank)

1330

Procedures (number)54Procedures (number)75Documents to export (number)

55

Time (days)3419Time (days)14438Time to export (days)157

Cost (% of income per capita)5.10.3Cost (% of property value)7.510.3Cost to export (US$ per container)

3401,146

Minimum capital (% of income per capita)

0.00.0Getting credit (rank)77Documents to import (number)

54

Dealing with licenses (rank)10120Strength of legal rights index (0–10)88Time to import (days)1614

Procedures (number)2110Depth of credit information index (0–6)55Cost to import (US$ per container)

7001,139

Time (days)215181Public registry coverage (% of adults)0.00.0Enforcing contracts (rank)

11024

Cost (% of income per capita)91.122.2Private bureau coverage (% of adults)100.0100.0Procedures (number)3118

Employing workers (rank)8283Protecting investors (rank)55Time (days)585217

Difficulty of hiring index (0–100)028Extent of disclosure index (0–10)710Cost (% of claim)22.121.1

Rigidity of hours index (0–100)6040Extent of director liability index (0–10)96Closing a business (rank)

367

Difficulty of firing index (0–100)2030Ease of shareholder suits index (0–10)99Time (years)4.00.4

Rigidity of employment index (0–100)

2733Strength of investor protection index(0-10)

8.38.3Cost (% of estate)239

Nonwage labor cost (% of salary)611Paying taxes (rank)622Recovery rate (cents on the dollar)

43.987.9

Firing cost (weeks of salary)9149Payments (number per year)338

Time (hours per year)22576

Total tax rate (% of profit)39.125.8