Israel

When the British left Palestine, the UN divided the territory between the Jews and the Arabs, a division not supported by the Arab world. In the wars that followed, Israel defeated the Arab countries. (Unless otherwise specified, the Israeli occupied territories since the war of 1967 are not included in the Israel country profile). In 1979, Egypt and Israel signed a peace treaty and in 1982 Israel left the Sinai. Israel also signed a treaty with Jordan in 1994, and, in 2000, Israel ended its 1982 occupation of southern Lebanon. In the summer of 2006, after two Israeli soldiers were kidnapped by Lebanese Hizballah, violence arose in Lebanese territory.

Main Airports

Eilat Central Airport (ETH), Tel Aviv (TLV) (Ben Gurion International)

U.S. Embassy

71 Hayarkon Street, Tel Aviv
tel. 03-519-7575
http://telaviv.usembassy.gov/

Statistics

GDP: purchasing power parity:

$154.5 billion (2005 est.)

GDP - real growth rate:

5.2% (2005 est.)

GDP - per capita: purchasing power parity:

24,600 (2005 est.)

Inflation rate (consumer prices):

1.3% (2005 est.)

Labor force:

2.42 million (2005 est.)

Exports:

$40.14 billion f.o.b. (2005 est.)

Exports - partners:

US 37.6%, Belgium 7.4%, Hong Kong 4.3% (2005)

Imports:

$43.19 billion f.o.b. (2005 est.)

Imports - partners:

US 18.6%, Belgium 9.1%, Germany 6.7%, UK 5.6%, China 4.3%, Italy 4.3% (2005)

Population:

6,352,117

Population growth rate:

1.18% (2006 est.)

Population Below Poverty Line:

21% (2005)

Major Industries:

high-technology projects (including aviation, communications, computer-aided design and manufactures, medical electronics, fiber optics), wood and paper products, potash and phosphates, food, beverages, and tobacco, caustic soda, cement, construction, metals products, chemical products, plastics, diamond cutting, textiles, footwear

Employing Workers: 82*

Registering Property: 150*

Enforcing Contracts: 110*

Closing a Business: 36*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Israel	Region
Procedures (number)	5	10.3
Time (days)	34	40.9

Israel Risk Assessment

Country Rating

Rating: A4

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behaviour. Corporate default probability is still acceptable on average.

Risk Assessment

Barely affected by the Lebanese war in 2006, strong economic growth — estimated at 5.4 per cent — continued in 2007, driven by household consumption, private investment, and foreign demand. Manufacturing industry production in the first nine months last year equalled the full-year output in 2006. The growth of high-and-medium-technology sectors was particularly strong, buoyed by increased investment and robust foreign demand. Business in the construction and tourism sectors (affected by the Lebanese war) recovered in the third quarter after a long period of weak growth. Unemployment continued to ease. Inflation remained limited with the shekel appreciation against the dollar mitigating the effects of rising oil prices. In 2008, private demand underpinned by the decline of unemployment will be the main growth engine. The export slowdown attributable to the shekel appreciation against the dollar and the slowdown of American demand — already appreciable late last year — should affect the economy, which should nonetheless be up 4.4 per cent. The business climate has remained good with the Coface payment incident index remaining below the world average.

The consolidation of government finances is well under way but a decline in revenues this year due to the growth slowdown could result in a public deficit larger than in 2007. Despite deterioration of the current account balance, the external financial situation remains good, with the risk of a foreign exchange liquidity crisis manageable since the sources of external financing are relatively stable. The government coalition, meanwhile, remains weak and early parliamentary elections could take place before 2010. A change in government would, however, be unlikely to jeopardise current economic policies.

STRENGTHS

• With an open and diversified economy, Israel's engagement in the OECD accession process enhances its capacity to attract foreign direct investment.
• The country holds leadership positions in technologically advanced and intermediate high value-added products.
• The workforce is highly skilled.
• The country can count on the political and financial backing of the United States and the Diaspora.

• Although declining, public sector debt is still high.
• The electoral scattering has resulted in shaky government coalitions that often complicate the drawing up of the budget.
• Exports are dependent on economic conditions in the United States.
• Failure to resolve the conflict with the Palestinians has fostered a climate of insecurity that weighs on the Israel's economic potential.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation