preface

8
THE ISRAELI ECONOMY IN 2010
The Israeli economy was marked by continuous progress in 2010, with an
annual growth rate of 2.7% GDP per capita. Inflation stood at 2.6% while Bank
of Israel interest rates gradually rose from 1.25% in January 2010 to 2% in
December 2010. Imports and exports recovered in the first half of 2010 but
declined later, in the third quarter. The current account surplus remained stable
at 4.3% of GDP in the second quarter. Furthermore, the Debt-to-GDP ratio
improved in 2009, dropping to 77.7%. Finally, the labor market also underwent
major improvements, with a 6.6% unemployment rate in Q3 and a participation
rate increasing to 57.8%.
Israel was invited to join the OECD as a full member on May 10 th , 2010 and
officially joined on May 27th, 2010. This marked another step in Israel’s ability
to better accomplish necessary reforms and enhance its credit rating and
investment atmosphere, resulting in the development of various sectors of
Israeli society and economy, particularly in the environmental, educational and
employment sectors. The improvement and upgrading process gained by
joining the OECD will persist so long as the Israeli government pursues a
constant peer review and adjusts its regulation policy to the standards
maintained by the other OECD members.
Below is a summary of the main economic indicators in Israel.
This chapter concludes with a forecast of major economic developments based
on several sources including, inter alia, the Bank of Israel's Research
Department, the Ministry of Finance and a number of commercial banks.
1.2. MACRO-ECONOMIC DEVELOPMENTS IN 2010
1.2.1. Gross Domestic Product (GDP)
Israel fell, promptly but briefly, into the recession during the global
financial crisis of 2008 and 2009. It entered the crisis with solid
fundamentals, thanks to years of a cautious fiscal policy, a series of
liberalizing reforms and a flexible banking sector. As a result, the Israeli
economy showed signs of an early recovery.
In 2010, the Israeli GDP increased by 4.5%, compared with 0.8%
growth in 2009 and 4.2% in 2008.
Israel’s population grew by 1.9% in 2010, while the GDP per capita
increased by 2.7%, compared with a 1.1% decrease in 2009. In 2010,
the GDP per capita totaled NIS 106.4 thousand ($28.5 thousand). In
BDO Israel