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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 ($28.5 thousand). In BDO Israel
6% 5% 4% 3% 2% 1% 0% -1% -2% BDO Israel DOING BUSINESS IN ISRAEL comparison, according to OECD data, the GDP per capita of OECD countries increased by 2.3% in 2010. Annual Growth Rate in Gross Domestic Product -0.9% -0.8% 1.2% 4.4% 5.2% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Central Bureau of Statistics Israel, Monthly Bulletin of Statistics, January 2011. 1.2.2. Investments Investments in fixed assets rose by 9.9% in 2010, compared with a 5.8% drop in 2009 and a 3.9% increase in 2008. Investments in various fields of the economy (including the nonresidential construction sector, machinery, equipment and vehicles, but excluding ships and aircraft) rose in 2010 by 9.5%, after a 9.8% drop in 2009 and a 2.0% increase in 2008. Investments in residential housing rose by 10.8% in 2010, after a 5.5% increase in 2009 and a 10.2% increase in 2008. 1.2.3. Employment The number of employee posts in the overall economy as of October 2010 increased by 1.8%, compared with the corresponding period in 2009, and the average real gross salary increased by 2.0%. The monthly average wage per employee in 2010 amounted to NIS 8,430 (2,375$). According to data recorded by the Central Bureau of Statistics, unemployment in year 2010 reached a rate of 6.7% of the civilian labor force. 5.0% 5.3% 4.2% 0.8% 4.5% 9
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5.5. PROPRIETARY RIGHTS 58 BUSINESS
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60 ACCOUNTING AND AUDITING PERSPECT
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74 INVESTMENT INCENTIVES AND TRADE
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106 TAXATION Under the recent tax r
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108 TAXATION (d) More than 50% of o
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110 TAXATION 8.2.2.6. Dividends Rec
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112 TAXATION (3) Location of fixed
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114 8.2.3.4. Rental Income from Out
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116 TAXATION "Accommodating Year”
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118 TAXATION "Privileged Securities
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120 TAXATION 8.2.4.3. Tax exemption
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8.3.4. Sale of Stocks 122 TAXATION
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124 TAXATION 8.3.7.3. Setting-off C
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126 TAXATION ♦ According to the r
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8.5. TAXATION OF TRUSTS 128 TAXATIO
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8.6.1. Definitions: 130 ♦ Israeli
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132 5) Certain services rendered to
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8.8.6. Real Estate Companies 134 TA
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8.10. TAX TREATIES 136 TAXATION As
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138 Dividends % Interest % TAXATION
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140 FOREIGN EXCHANGE CONTROL AND PR
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10.3. ISRAEL LAND ADMINISTRATION OF
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11.2. KEY FIGURES FOR DECEMBER 31,
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Example A NIS Example B NIS APPENDI
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APPENDIX 2 Industrial enterprises m
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Ministry of Justice 29 Tsalch Adin
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Israel - US Binational Industrial R
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BRAZIL Embassy of Israel S.E.S Av.
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ECUADOR Embassy of Israel Av. La Co
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IVORY COAST (COTE D’IVOIRE) Embas
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PANAMA Embassy of Israel Edificio P
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THAILAND Embassy of Israel Ocean To
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REPUBLIC OF THE FIJI ISLANDS Embass
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