preface

2. ISRAEL – GENERAL OVERVIEW
2.1. BACKGROUND
Since declaring its independence in 1948, Israel has been the home of Jewish
immigrants from all over the world. The country’s population - composed of
approximately 75.4% Jews, and 24.6% Muslims, Druze, Christians and others -
grew from 870,000 inhabitants in 1948 to over 7.7 million in 2010.
Over the past decade alone, Israel’s population grew by 20.9%. This was partly
due to the massive wave of immigration from the former USSR – following its
breakup at the beginning of the last decade – and partly from Ethiopia.
Immigration in the years 1995 – 2000 stabilized at approximately 70,000
immigrants annually, but this figure has since dropped to 19,000 in 2006,
18,000 in 2007, 14,000 in 2008, 14,500 in 2009 and 16,000 new immigrants in
2010.
Important economic landmarks impacting the development of the modern
Israeli economy were the intensified negotiations in the 1990's with the
neighboring Arab countries, attracting an increasing number of direct and
indirect foreign investors to Israel. This was followed later by the hi-tech
bubble burst at the beginning of the decade and the deterioration of the
geopolitical situation.
In recent years - from 2005 till the eruption of the global financial crisis in
2008 - the Israeli economy enjoyed a high average annual growth rate of 4.9%,
due to the boost in the global economy, economic reforms undertaken by the
Government and improvement in the geopolitical situation.
Although the global economic conditions continue to affect Israel as an open
market exposed to worldwide economic trends, recent data indicates that the
financial crisis has had a relatively moderate impact on the Israeli economy,
compared with other developed countries. This is evident mainly from the
positive growth of the Israeli economy in 2010 (4.5%) and the Bank of Israel’s
growth forecast of 3.9% for this year.
2.2. GOVERNMENT
Israel is a secular democracy whose parliament (Knesset) is elected through
general elections every four years, unless the Knesset or Prime Minister decide
to hold early elections. Under certain circumstances, the Knesset can also serve
for more than four years.
BDO Israel
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