COUNTRY the ascendant Iran rule out any major adjustment

                           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                             COUNTRY REPORT OF ISRAEL

OVERVIEW OF THE COUNTRY

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ISRAEL, a parliamentary republic, is located on the eastern shore of the Mediterranean Sea. The capital of Israel is Jerusalem, & its currency is Shekel (ILS).

 

PARAMETERS

COUNTRY-ISRAEL

1.Population

Ø  8.547 million people
Ø  20% born overseas
Ø  Young population

2.Size

Ø  20,770  Sq. Kilometres

3.Language

Ø  Hebrew & Arabic

4.Head of State

Ø  Reuven Rivlin

5.Political Structure

Ø  Zionism

6.Foreign Trade

Ø  Initiation & overseas trade agreements.

 

                                                   INTERNATIONAL RELATION

The foreign relations of  ISRAEL are Israel’s relations with other governments and peoples. Israel’s most important relationship, being the largest trading relationship in the world, is with the United States. However, Israeli governments have traditionally maintained active relations with other nations which are as follows :

                 Main  Import Partners

                   Major Export Partners

Ø  United States
Ø  China
Ø  Switzerland
Ø  Germany
Ø  Belgium
Ø  Italy

Ø  United States
Ø  Hong Kong
Ø  United Kingdom
Ø  China

                       IMPORTS

                     EXPORTS

Ø  Crude Oil

Ø  Telecommunications Equipments

Ø  Grains

Ø  Mechanical Machinery

Ø  Raw Materials

Ø  Agricultural Products

Ø  Military & Defense Equipments

Ø  Chemicals

Ø  Investment Goods

Ø  Textiles & Apparel

Ø  Rough Diamonds

Ø  High Technology Products

Ø  Petroleum

Ø  Pharmaceuticals

 

The country is world’s one of the leading Greenhouse-food-exporting countries. It exports every year $1.3 billion worth of agricultural products which also includes $1.2 billion of agricultural inputs and technology.

 

                                                            POLITICAL STABILITY

Iarael’s political system is a parliamentary democracy. Politics in Israel is dominated by the Zionist parties. They are divided into 3 camps : Labor Zionism, Revisionist Zionism, Religious Zionism. The Prime Minister is the head of  Government & also the leader of  a multi party system. 

 

                                                                                                                      Source : World Bank Report

The above chart shows the political stability of Israel from yr 2002-2017. We can see that the average value of Israel was -1.26 points and minimum was -1.62 points in 2009 & the maximum has gone to -1.05 points in 2014.

In the Middle East, Israel is one of the most stable country, though there is an extremely diverse society which is marked with political and cultural differences between the ultra-Orthodox Jews and secular. There is a fragmented political condition which in variably large coalition governments.

Political condition of Israel is never dull. By analyzing the current situation of Israel we can see the following :

Ø  Israeli-Palestinian Conflict : The Palestinian are divided into the secular Fatah movement and the Ialamist Hamas. Whereas the Israeli do not trust the Arab and are also fear of the ascendant Iran rule out any major adjustment towards the Palestinian.

Therefore growing Israeli disappointment over the possibility for a peaceful agreement with the Arab and the Palestinian will help in more Jewish settlements on occupied territories and constant relation with Hamas.

                             

 

 

 

                          MAJOR ECONOMIC INDICATORS

Overview

2014

2015

2016

GDP per capita (USD)

39,235

36,827

37,204

Investment (annual in %)

0.0

0.1

10.3

Unemployment Rate

5.9

5.3

4.8

Inflation Rate (CPI, annual variation in %)

0.5

-0.6

-0.5

Exchange Rate (vs USD)

3.89

3.90

3.85

Consumption (annual in %)

4.1

4.0

5.4

Economic Growth (%)

3.2

2.6

4.0

 

As of the end of 2016, Israel’s reported GDP per year was worth 318.74 billion US dollars. The GDP value represents 0.51% of the world economy. The  GDP in Israel from 1960 until 2016 was averaged 84.78 USD Billion, reaching a high value of 318.74 USD Billion in 2016. The lowest record was 2.60 USD Billion in 1962.

 

Total

Per Capita

GDP (Nominal )2017

$387.3672 billion

$44,019

GDP (Real ) 2017

$360.976 billion

$41,020

 

The major economic sectors of the country are high-technology and industrial manufacturing.

Ø  2.8% of the country’s GDP is derived from Agriculture. 2.7 million of the total labor force, 2.6% are employed in production of agriculture, and 6.3% in services for agriculture. Israel exports agricultural products worth more than $1.3 billion every year & agricultural inputs & technology of $1.2 billion.

Ø  Industrial Production Growth Rate(2016) : 2.6%

Unemployment Rate (2016) :5%

Population Below Poverty Line (2016) : 22%

Taxes & Other Revenue (2016) : -25.9%

Budget Surplus (2016) : -2.5%

 

The above  data shows the Israel’s GDP consumption by various parameters.

Ø  The parameters include GDP-consumption by end use (2016) which shows Household consumption, Government Consumption, Investment in fixed capital, Exports of  Goods &

Ø  The other charts shows GDP- Consumption by Sector By Origin (2016) which includes Agriculture, Industry & Services.

 

                                                           

                                                            POLICY TRENDS

Fiscal Policy

An analysis of the Fiscal Policy in 2016, to view points for 2017, & what the expected developments.

Ø  With a deficit of 2.1 % of GDP the Government finished 2016, similar to 2015. There is a decline of 62% of the public debt to GDP ratio.

Ø  Deficit ceiling for 2017 & 2018 was set at a rate of 2.9% of GDP, but it is expected to lower in 2017 at the rate of 2.5% of GDP, & in 2018 it is expected to go slightly below the ceiling.

Ø  The lower-than targeted deficit reflected :

a)      Higher expected tax receipts, which was a result of growth which is more rapid than expected. There is an increase in import of the vehicles – resulting highly taxed product.

b)      Expenditures were lower than expected.

Ø  From the volatile real estate and vehicle markets the contribution of tax receipts increased by 0.8% of GDP between 2012 -2016.

Ø  Israel’s primary civilian expenditure is lowest in the OECD, which makes the Government difficult to allocate resources to policy measures which will affect the economic growth in long-term.

 

 

 

 

According to the new budget rules set by the Law, the state of the budget must be examined by the Government not only for the current year for which the budget has been approved (2017 & 2018), but also for the target set for the later years.

Ø  The projection of expenditure for 2019 and 2020 shows that the expected level of expenditure in 2019 is little higher than the expenditure ceiling for that year- comparatively improved than previous years.

Ø  There is 6% increase in total budgetary expenditure in 2016, & NIS is 2 billion lower than the expenditure ceiling set in the budget.

 

Government Activity & Fiscal Policy

As. Of

Latest figure

Change (%/percentage points)

1

Total Gov. Revenues (NIS million)

NOV-17

311,448

9.9%

2

Revenues from Taxes (NIS million)

NOV-17

288,355

10.1%

3

Total Gov. Expenditure (NIS million)

NOV-17

309,790

8.1%

4

Gov. domestic deficit excluding credit granted( NIS billion)

NOV-17

1.7

4.9

5

Government Domestic Deficit excluding credit granted (% of GDP)

Q/3 2017

-1.5

0.3

6

Tax Burden (% of GDP)

2016

30.2

0

                                                        MONETARY POLICY

 

According to the Bank of Israel Law, 5770-2010, the Bank of Israel has 3 objectives :

1.      Price stability is defined as an annual inflation rate of between 1% and 3%.

2.      To support the other objective economic policy of the Government, especially growth, employment & reducing social gaps, including that this should not affect the attainment of price stability.

3.      In order to attain the stability & orderly activity of the financial system, Israel’s bank employs various tools,  and the Bank intervenes in the foreign exchange market.

The Monetary committee decides on November 27, 2017 to keep the interest rate unchanged at 0.1%.

Ø  Some  slowdown in activity is seen in the housing market data, with continued increase in home prices at a relative rate.

Ø  The global economy continues to gain traction in the positive momentum. Inflation in most major economies remains below target, despite of the improvement in activity and increase in oil prices.

Ø  Major central banks shifted their monetary policy to a less expensive direction, but the monetary environment remained very expensive.

 

 

Economic indicators: Inflation And Monetary Policy

 

 

SEP-17

OCT-17

NOV-17

 

Inflation: Domestic and global (monthly averages, %)

1.

Monthly change in Consumer Price Index

0.1

0.3

-0.3

2.

Monthly change in CPI excluding food, energy, and fruit and vegetables

0

0.3

-0.1

3.

Inflation rate over the previous 12 months

0.1

0.2

0.3

4.

Inflation expectations derived from the capital market for the next 12 months

0.11

0.1

0.26

5.

Inflation expectations derived from the capital market for the rate in 10 years

1.5

1.48

1.54

6.

Professional forecasters’ average estimate of inflation over the next 12 months

0.58

0.58

0.66

7.

Inflation rate in the eurozone over the past 12 months (1)

1.53

1.38

1.54

8.

Inflation rate in the US over the past 12 months

2.23

2.04

2.2

 

Interest rates and spreads (monthly averages, percent)

9.

Bank of Israel interest rate

0.1

0.1

0.1

10.

Central bank interest rate differential between Israel and the US

-1.15

-1.15

-1.15

11.

Yield on 12 month makam

0.09

0.09

0.11

12.

Yield on 12 month US Treasury bills

1.26

1.38

1.54

13.

Professional forecasters’ average estimate of interest over the next 12 months

0.12

0.12

0.12

14.

Yield on unindexed 10-year government bond

1.72

1.63

1.6

15.

Yield on 10-year US Treasury note

2.2

2.36

2.35

16.

Yield spread between unindexed 10-year government bond and 3-month makam (slope of nominal curve)

1.62

1.55

1.47

 

                                                    EXCHANGE RATE

 

1 Israeli New Shekel equals
18.36 Indian Rupee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FOREIGN POLICY

The Foreign policy of Israel was established 100 years prior to its establishment when Zionist ideology and diplomacy was dominated by state-seeking and state-making. The element of state-keeping was determined the foreign policy after the state was established. Following 7 factors emerged in defining and applying Israeli and Zionist foreign policy:

(1) Creating and sustaining a Jewish territory with a significant Jewish population,

(2) Developing a viable economy,

(3) Finding and retraining major power political support,

(4) Evolving a “never again syndrome,” that is that Jews would never again find themselves unable to defend themselves (military acquisition and developing a nuclear weapon for deterrence),

(5) Evolving a defense policy to offset the asymmetry of Israel’s demographic inferiority and geographically small size as compared to the surrounding hostile Arab population,

 (6) Assuring access to water and fossil and other fuels sufficient to sustain the well-being of the state,

(7) Seeking accommodations with neighbors when available and neutralizing regional existential threats.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                   INDIA VS ISRAEL

 

PARAMETERS

ISRAEL

INDIA

Capital

Jerusalem

Delhi

Population

8,543,000

1,324,171,354

Surface Area (Sq. Km.)

20,070

3,287,259

Currency

Israeli Shekel

Indian Rupees

International Relations

IMF, OECD, UN

ACD, BIMSTEC, BRICS, G20, IMF, MGC, UN, SAARC

GDP per capital ($)

37,1925

1,7105

Debt (% GDP)

62.31%

69.58%

Expenditure ( % GDP)

40.13%

27.90%

CPI (Overall)

0.3%

3.6%

Exports (M $)

60,160.2

264,020.3

Imports (M $)

68,835.3

359,064.9

 

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