Israel

Politics:

• Analysis

  Israel politics: Israel finally has a new government

  After unusually protracted coalition negotiations following the January 22nd parliamentary elections, the sitting prime minister, Binyamin Netanyahu, reached a tentative agreement to form Israel's new government late on March 13th. The allocation of cabinet posts and the declared policy goals of the new government reflect the immense negotiating and electoral power of Mr Netanyahu's two biggest coalition partners-a centrist party, Yesh Atid, led by Yair Lapid, and Naftali Bennett's extreme-right Jewish Home (Habeyit Hayehudi). Whether they will be able to retain that strength, which was based on a close partnership during the coalition talks, once they are in power may well determine the direction that the new government takes.

  Mr Netanyahu's negotiating position in the coalition talks had been weakened. His party, Likud-Beiteinu, fared poorly in the elections, winning only 31 seats (out of 120) in the Knesset (parliament), far short of the 61 he needed for a parliamentary majority and well below the 42 they held in the previous Knesset. Adding to his woes, Yesh Atid and Jewish Home formed a negotiating alliance that Mr Netanyahu was unable to break. With 19 and 12 seats, respectively, Yesh Atid and Jewish Home have parliamentary strength equal to Likud-Beiteinu. Jewish Home would not enter the government without Yesh Atid, which, in turn, refused to join a coalition with the ultra-Orthodox parties that have traditionally served in nearly all governments in Israel since the state's foundation in 1948.

  Mr Netanyahu had few options for his coalition

  Mr Netanyahu's only other coalition option would have been to recruit the left-of-centre Labour Party into a coalition with the ultra-Orthodox parties, a proposal that the Labour leader, Shelly Yachimovich, rejected out of hand. Despite being political novices, Mr Lapid and Mr Bennett (neither of whom have even held a Knesset seat before) and their advisers proved to be skilled negotiators who exploited not only their strengths but also Mr Netanyahu's personal and political weaknesses.

  Likud-Beiteinu still retains some top posts in slimmed-down government

  Mr Netanyahu's party retains two of the three most powerful cabinet posts, with defence going to a former chief of staff and senior Likud politician, Moshe Yaalon, and foreign affairs being held by Mr Netanyahu in reserve for Avigdor Lieberman, who had to step down from that position towards the end of the previous government to face a criminal indictment and who will be reappointed if he is exonerated. Mr Lapid, a media personality, will fill the third key post as finance minister. His party also gets the pick of second-string ministries in terms of power and prestige, including education, health and social welfare. Mr Bennett, a successful businessman in the high-tech sector prior to entering politics, will serve as economics and trade minister (formerly the Ministry of Trade, Industry and Labour), and his party gets the housing and several lesser portfolios. Jewish Home was also was awarded the powerful post of chairman of the Knesset Finance Committee.

  That leaves Likud-Beiteinu with little else, a situation that is already creating dissension in party ranks and may cause Mr Netanyahu trouble in the future. Likud-Beiteinu gets the Ministry of Interior but little else of any importance. The justice portfolio was awarded to Tzipi Livni, whose small Hatnua party has six seats and who signed up to the coalition earlier.

  Likud-Beiteinu dominates security, while new parties hold the economic ministries

  From a policy viewpoint Likud-Beiteinu is taking responsibility for defence and foreign affairs with the Yesh Atid-Jewish Home alliance presiding over economic policy. Taking responsibility for economic policy may be something of a poisoned chalice. Although Mr Lapid talked about shifting priorities to make policy friendlier to the middle class, he is facing a massive fiscal hole in the 2013 budget, which he must bring to the Knesset as his first and most urgent task. His first act in office will probably be pushing through unpopular spending cuts and tax increases. On the foreign affairs-defence side, Ms Livni has been given authority over future Palestinian negotiations, putting her potentially into a central role, although it is doubtful whether Mr Netanyahu and his partners will give her significant autonomy in this position, seeing her instead as a more acceptable interlocutor in international negotiations. Mr Yaalon is known to take a tough stance on Iran's nuclear ambitions.

  Yesh Atid setting the agenda

  The new government's policy goals in the main reflect the concerns of Yesh Atid. The party forced Mr Netanyahu to reduce the size of the cabinet from 28 to 22 portfolios and to promise to cut it further to 18 (the number mandated in law but rarely adhered to) in the next government. There are other political reforms in the offing-one being to double the threshold, to 4% of the vote, that parties must reach to secure Knesset representation, and another, which is more to the prime minister's liking, to raise the parliamentary requirements for bringing down a government.

  However, the most important policy goal for Mr Lapid's party, one which the government is committed to putting into law over the next few weeks, is to draft ultra-Orthodox Jewish men into the army. This was a major campaign theme for Mr Lapid but an issue that Mr Netanyahu wanted to avoid in order to maintain the historically close ties between Likud and the ultra-Orthodox parties. Under the coalition agreement terms, only 1,800 young ultra-Orthodox men will now be exempt from the draft to pursue religious studies every year. The rest will have until the age of 21(most Jewish Israelis are drafted at 18 and some Arab communities also serve) to choose between the army or civilian national service.

  The ultra-Orthodox parties will come under further pressure with a plan to force them to teach a core curriculum of secular subjects at their schools, which have been run largely independently despite receiving state funding, and with incentives to coax the ultra-Orthodox into the labour market (which military or civilian service should also promote). Mr Netanyahu's ability to assuage the ultra-Orthodox and maintain ties with these communities through government handouts will be constrained by the tough fiscal situation and the fact that he will not control the education or religious services ministries, two traditional conduits for money to reach the community.

  Few in the coalition are keen to prioritise Israeli-Palestinian peace process

  The government is also committed on paper to renewing peace talks, but it is not clear that anyone in the coalition, apart from Ms Livni, feels any urgency about them. Jewish Home's control of the Ministry of Housing will enable it to expand construction in West Bank settlements, which will certainly anger the Palestinians and the US government.

  The fate of the government will depend largely on whether the Yesh Atid-Jewish Home alliance endures. Although the two parties are in agreement on economic policy and the two leaders have developed a strong personal relationship, pressure from US to restart Israeli-Palestinian negotiations and Yesh Atid's barely concealed antipathy for the ultra-Orthodox could test the partnership, and the coalition, which could collapse early, as has been the fate of most previous governments in Israel.

  March 14, 2013

• Background

  Israel: Key figures

  Binyamin Netanyahu

  In his second term as prime minister (the first was in 1996-99), Mr Netanyahu has displayed improved political skills, balancing his hawkish coalition against US diplomatic pressure. He has also sought to build on his record of significant achievement as a reformist finance minister in 2003-05, by pursuing structural reforms and tax reductions. His success in guiding Likud back to power—after its split in late 2005 led to its worst-ever result in the 2006 general election—has enabled him to shift the party toward more moderate and pragmatic policy positions.

  Avigdor Lieberman

  An aide to Mr Netanyahu in the 1990s, Mr Lieberman has emerged as the most successful of Israel's Russian-born politicians. By attracting the support of immigrants from the former Soviet Union, his party, Yisrael Beiteinu, won 11 parliamentary seats in 2006 and 15 in 2009. This achievement has propelled him to the posts of deputy prime minister and foreign minister. But, although his abrasive style seems unsuitable for his office, the main threat hanging over him is a series of ongoing investigations into alleged corruption.

  Ehud Barak

  A former army chief of staff and prime minister from 1999 to 2001, Mr Barak returned to politics in 2007, wresting back the Labour Party leadership and the post of defence minister. He retained both posts in the wake of the 2009 election, and has since largely neutralised his intra-party opposition, without improving his overall popularity. As defence minister he will continue to focus his attention on the perceived threat from Iran.

  Tzipi Livni

  Ms Livni entered politics in 1999. She joined Ariel Sharon when he left Likud to establish Kadima in late 2005, serving as foreign minister in Ehud Olmert's government and replacing him as party leader in September 2008. However, after failing to reconstruct Mr Olmert's coalition, she was obliged to call an early general election, which she lost. As opposition leader she has proved resolute, successfully thwarting attempts to split the party and/or replace her.

  Stanley Fischer

  A former IMF chief economist and renowned academic, Mr Fischer surprised the global financial elite by accepting in January 2005 the Israeli government's offer to serve as the governor of the Bank of Israel (the central bank). His swift response to the global crisis in 2008 is widely credited with helping the Israeli economy navigate the ensuing turmoil with relatively little damage. Mr Fischer was reappointed to a second five-year term of office beginning in May 2010.

  May 13, 2010

• Structure

  Israel: Political structure

  Official name

  State of Israel

  National legislature

  Unicameral Knesset of 120 members directly elected by proportional representation for a four-year term. Universal direct suffrage over the age of 18

  National elections

  Parliamentary election: January 22nd 2013; next election scheduled for January 2017

  Head of state

  President (largely a figurehead), elected by Knesset majority for a seven-year term. Currently Shimon Peres, who was elected in July 2007

  National government

  Cabinet, responsible to the legislature; the prime minister, Binyamin Netanyahu, leads the outgoing coalition government, comprising Likud-Beiteinu, Shas, United Torah Judaism, Atzmaut and Habeyit Hayehudi. Negotiations on a new coalition are currently underway

  Main political parties

  Likud-Beiteinu (right-wing, formed from a merger between Likud and Yisrael Beiteinu); Yesh Atid (centrist); Labour (left-wing); Shas (a right-wing religious party); Habeyit Hayehudi (Jewish Home, right-wing); United Torah Judaism (an ultra-Orthodox right-wing party that includes Agudat Israel and Degal Hatora); Hatnua (centre-left); Meretz (left-wing); Kadima (centrist); United Arab List; Hadash (communist, predominantly Arab); National Democratic Assembly (Arab)

  Key ministers

  Prime minister, economic strategy minister, pensioner affairs minister & health minister: Binyamin Netanyahu (Likud)

  Vice-prime minister (& regional development minister): Silvan Shalom (Likud)

  Vice-prime minister (& strategic affairs minister): Moshe Ya'alon (Likud)

  Agriculture & rural development: Orit Noked (Atzmaut)

  Communications: Moshe Kahlon (Likud)

  Culture & sport: Limor Livnat (Likud)

  Defence (& deputy prime minister): Ehud Barak (Atzmaut)

  Education: Gideon Saar (Likud)

  Environment: Gilad Erdan (Likud)

  Finance: Yuval Steinitz (Likud)

  Foreign affairs (& deputy prime minister): Avigdor Lieberman (YB)

  Home front defence: Matan Vilnai

  Housing & construction: Ariel Atias (Shas)

  Immigrant absorption: Sofa Landver (YB)

  Intelligence & atomic energy: Dan Meridor (Likud)

  Interior: Eliyahu Yishai (Shas)

  Internal security: Yitzhak Aharonovitch (YB)

  Justice: Ya'akov Ne'eman (not MP)

  Minorities & trade, industry & labour: Shalom Simhon (Atzmaut)

  National infrastructure: Uzi Landau (YB)

  Religious affairs: Yakov Margi (Shas)

  Strategic affairs: Moshe Ya'alon (Likud)

  Tourism: Stas Misezhnikov (YB)

  Transportation & road safety: Yisrael Katz (Likud)

  Welfare & social services: Moshe Kahlon (Likud)

  Speaker of the Knesset

  Reuven Rivlin

  Central bank governor

  Stanley Fischer

  March 05, 2013

• Outlook

  Israel: Key developments

  Outlook for 2013-17

  • Regional upheaval poses risks for Israeli security, underlined by the conflict in late 2012 in Gaza and the ongoing Syrian civil war. A pre-emptive strike against Iran's nuclear facilities is unlikely but cannot be ruled out.
  • The general election in January led to a surprising surge in support for a new centrist party, Yesh Atid. Although right-wing parties will still figure prominently in a new coalition, the centre-left will acquire a stronger voice.
  • We expect GDP growth to remain sluggish in 2013, as Israel's export-dependent economy battles against external headwinds. Growth will pick up to an average of 4.5% in 2014-17, helped by a recovery in the global economy.
  • Monetary policy will be loose in 2013, as inflation remains subdued. Policy will then be tightened in 2014-17, as demand growth and inflation pick up.
  • The fiscal deficit will edge down in 2013, helped by the passage of tough tax and spending measures. By the end of the forecast period, the budget will have moved close to balance, helped by rising royalties on gas.
  • The New Israeli shekel will not strengthen considerably against the US dollar until 2014, reflecting a loose monetary policy and lacklustre export growth. The shekel will appreciate in 2014-17 as the external balance strengthens.
  • The current account will remain in deficit in 2013, reflecting sluggish global demand. Stronger export growth and the start of large-scale domestic natural gas production will underpin a return to surplus in 2014-17.

  Review

  • The prime minister, Binyamin Netanyahu, has found coalition-building challenging, particularly with his own party representation depleted and newer parties strengthening their position.
  • Mr Netanyahu has brought in the centre-left Hatnua party to join Likud-Beiteinu in the coalition.
  • On January 29th Israeli warplanes reportedly hit a weapons convoy in Syria carrying weaponry for the Lebanese Shia militia group, Hizbullah.
  • The Bank of Israel (central bank) governor, Stanley Fischer, has tendered his resignation, effective from June after eight years in the post. He has made considerable strides in improving policy credibility in Israel.
  • The central bank has tightened mortgage lending risk criteria in a bid to keep housing credit growth in check.
  • The economy expanded by an annualised rate of just 2.5% in the final quarter of 2012, leaving real GDP growth at 3.2% for 2012. Industrial production data also point to a slowdown in the last few months of the year.

  March 05, 2013

Economy:

• Background

  Israel: Country fact sheet

  Fact sheet

  Annual data	2012a	Historical averages (%)	2008-12
  Population (m)	7.9	Population growth	1.8
  GDP (US$ bn; market exchange rate)	241.8	Real GDP growth	3.7
  GDP (US$ bn; purchasing power parity)	248.9b	Real domestic demand growth	3.5
  GDP per head (US$; market exchange rate)	30,589	Inflation	3.2
  GDP per head (US$; purchasing power parity)	31,482b	Current-account balance (% of GDP)	1.7
  Exchange rate (av) NIS:US$	3.9	FDI inflows (% of GDP)	3.5
  a Actual. b Economist Intelligence Unit estimates.

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  Background: The State of Israel was established in 1948. In the June 1967 war Israeli troops captured and occupied the Sinai, the Gaza Strip, the West Bank and the Golan Heights, after which Israel annexed East Jerusalem. Sinai was returned to Egypt in 1982, following a peace agreement in 1979. In 1993 a peace accord with the Palestine Liberation Organisation led Israel to withdraw from most of the Gaza Strip and parts of the West Bank, but the peace process has since been derailed. The political scene was long dominated by two parties, Labour and Likud. Labour is enjoying a resurgence but has recently been overtaken by a new centrist party, Yesh Atid, led by a former television presenter, Yair Lapid.

  Political structure: Israel has a parliamentary system of representative government. The formal head of state is the president, who is elected by the legislature for a seven-year period, but his powers are largely ceremonial. The Knesset, a 120-seat unicameral parliament, is elected at least once every four years under a proportional-representation system. The leader of the party most likely to marshal a majority in the Knesset is called on by the president to form a government.

  Policy issues: Security issues remain paramount. Increased instability arising from the political revolutions in the Arab world and from Iran is perceived as the primary threat. Relations with the Palestinians, for long on the backburner, may receive greater prominence if centre-left parties enter the coalition. Israeli governments have made substantial progress in liberalising and stabilising the economy, but socioeconomic inequalities will preoccupy governments in the coming years.

  Taxation: Corporation tax rose from 24% to 26% in 2012. The top rate of income tax rose from 44% in 2010 to 48% in 2012 and increased further, to 50%, for the highest earners at the start of 2013. Capital-gains tax rates also rose in 2012. Value-added tax (VAT) was cut from 16.5% to 16% in 2010 but increased to 17% on September 1st 2012. Customs duties are to be cut gradually in 2013-17. Foreign investment, venture capital and expenditure on research are eligible for extensive tax benefits.

  Foreign trade: A weakening in export performance led to a sharp increase in the merchandise trade deficit in 2012, and a widening of the current-account deficit, reflecting high fuel import costs and weak demand in its main export markets in the EU and US. Increasing offshore gas supplies will reduce the energy import bill and support rising exports of gas.

  Major exports 2012	% of total	Major imports 2012	% of total
  Chemicals and chemical products (excl refining)	27.9	Fuel	22.3
  Polished diamonds (gross)	15.5	Diamonds (gross)	10.1
  Electronic communication, medical & scientific equipment	14.3	Machinery & equipment	9.6
  Electronic components & computers	8.7	Consumer non-durable goods	8.5
  Machinery & equipment	6.1	Chemicals & chemical products (excl refining)	7.0
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  US	33.3	US	12.0
  Hong Kong	9.2	China	7.5
  Belgium	6.5	Germany	6.3
  UK	5.8	Belgium	6.1
  India	5.2	Switzerland	5.5

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  March 05, 2013

• Structure

  Israel: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 05, 2013

• Outlook

  Israel: Country outlook

  Israel: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Following the election for the Knesset (parliament) on January 22nd, the focus of attention has shifted to the political manoeuvring and horse-trading that constitutes an essential part of the coalition-building process in Israel. The outcome of the election itself was a surprise. Predictions of a tilt to the right proved incorrect. Instead, a late surge by a new centrist party, Yesh Atid--headed by Yair Lapid, a former media personality--saw it capture 19 seats and emerge as the second-largest grouping after Likud-Beiteinu. Led by the prime minister, Binyamin Netanyahu, Likud-Beiteinu will still be the largest grouping in the 120-member Knesset, with 31 seats, and Mr Netanyahu has formally been asked to form the next government. However, this represents 11 fewer seats than the combined total of the two parties in the previous parliament.

  ELECTION WATCH: The parliamentary term is four years. Although the next general election is not due until early 2017, no government has completed a full term since the 1984-88 government of national unity. In general, the country's low-threshold parliamentary system (only 2% of the national vote is needed to secure representation in the Knesset) encourages a multitude of political parties--reinforcing the difficulties of forging stable and long-lasting coalitions. The composition of the new Knesset--split almost equally between right-wing and centre-left blocs--means that the new coalition that eventually emerges could be particularly prone to internal divisions, making it even more unlikely that the next government will last its full term.

  INTERNATIONAL RELATIONS: The upheavals in the Arab world have alarmed many Israelis. The 1979 treaty between Israel and Egypt has secured a lengthy period of peace between the two countries. Much to Israel's relief, the Egyptian president, Mohammed Morsi--who represents the Muslim Brotherhood-affiliated Freedom and Justice Party (FJP)--acted pragmatically in his response to the week-long conflict last November between Israel and Hamas (the Islamist group that governs the Gaza Strip), helping to broker a ceasefire. In addition, the FJP has shown no inclination to revoke the peace treaty with Israel. However, it could be pushed into a more adversarial stance if the conflict with Hamas were to resume, or the ongoing internal power struggle within Egypt were to result in further political changes and a hardening of attitudes towards Israel. In the meantime, the security chaos in the Sinai Peninsula, which borders southern Israel, is creating a major headache for the defence forces of both countries.

  POLICY TRENDS: Despite Mr Netanyahu's long-standing preference for tax cuts, low public spending and economic liberalisation, the outgoing government was obliged to increase welfare spending, following mass protests over social inequality. Concessions have also been made to soften the impact on households of the higher cost of fuel and other sensitive items. This shift of policy will be reinforced by the outcome of the recent election, given the gains made by the centre-left parties--and the likely inclusion of one or more of these parties in a new coalition.

  ECONOMIC GROWTH: Real GDP growth slackened to an annualised 2.5% in the fourth quarter of 2012, leaving annual growth at 3.2%, the weakest performance since 2009, but still respectable by developed-economy standards. Exports, including those from the key high-tech sector, are continuing to struggle in the face of the weakness in Israel's main overseas markets, especially Europe. In addition, given an increasing tax burden, domestic demand is unlikely to provide much of a spur to overall growth in 2013, when real GDP growth will slow to 2.7%. However, economic activity will be boosted later in the forecast period by rising exports, as external demand starts to recover more strongly, leading to an average growth rate of 4.5% in 2014-17.

  INFLATION: Sluggish economic growth will help to contain demand-side pressures on inflation in the short term. Together with some moderation in housing prices--helped by a tightening in mortgage lending criteria--and subdued global commodity prices, we expect inflation to average just 1.5% in 2013, below the mid-point of the central bank's target range of 1-3%. Inflationary pressures will pick up from 2014 onwards, as domestic demand starts to grow more strongly. However, a progressive tightening in monetary policy, together with an appreciation in the New Israeli shekel, will help to keep inflation within the upper part of the target range. Persistent overheating of the housing market remains a risk and may require further macro-prudential measures in order to avoid a housing bubble.

  EXCHANGE RATES: In an attempt to reduce upward pressure on the shekel, the authorities have introduced a number of measures aimed at curbing the influx of "hot money" in recent years. A 10% reserve requirement has been placed on local banks' derivative transactions with non-residents, and the tax exemption that foreigners previously enjoyed on their profits from short-term government debt (makam) has also been removed. In 2013 a large trade deficit, together with a low interest-rate differential between Israel and key developed economies, is likely to lead to modest depreciation in the shekel, although on average the currency will be stable. From 2014 we expect the shekel to strengthen steadily once more, particularly as rising domestic gas production starts to benefit the external position.

  EXTERNAL SECTOR: Weak demand in Israel's main export markets will lead to another sizeable merchandise trade deficit (4.1% of GDP) in 2013. Growth in business services exports and tourism will also stay sluggish. As a result, the current account will remain in deficit for the second successive year in 2013--at 0.2% of GDP. We expect the current account to return to surplus in 2014 as the recovery in export growth accelerates and import costs are held down by a steady increase in domestic gas supplies. The external balance will continue to benefit from more robust growth in goods and services exports and reduced energy imports over the remainder of the forecast period, with exports of gas making an increasing contribution from 2016-17 onwards. Despite a widening of the income deficit, reflecting rising dividend payments to international energy firms with stakes in the offshore gas sector, we expect the current-account surplus to reach 4.1% of GDP in 2017.

  March 11, 2013

• Forecast

  Israel: Country forecast summary

  Country forecast overview: Highlights

  • The political outlook will remain uncertain, following the general election on January 22nd. The electorate expressed strong support for a new centrist party, Yesh Atid. With 19 seats, Yesh Atid has the second-highest number of seats in the 120-member Knesset (parliament) after the right-wing Likud-Beiteinu-which, led by the prime minister, Binyamin Netanyahu, secured 31 seats. Mr Netanyahu faces the difficult challenge of attempting to forge a strong and viable coalition-taking account of both the ideological divide between right and left as well as the differing viewpoints of secular and religious parties. Against this backdrop, the next government is unlikely to serve its full, four-year, term.
  • Israel's recent conflict with militant groups in the Gaza Strip, as well as the deteriorating security situation in Syria and continuing political turmoil in Egypt, underlines the potential for increased instability in the wake of the upheavals in the Arab world. Tensions also remain high as a result of Iran's nuclear programme. Although the gains made by centre-left parties in the recent election improve the chances of a more flexible Israeli approach to the Palestinian issue, significant obstacles to fresh peace talks remain.
  • Following a major overshoot of last year's fiscal deficit target, the new government will need to prioritise additional tax-raising measures and spending cuts in the delayed 2013 budget. Successive governments have provided an array of incentives for investment, and these should remain.
  • Real GDP growth will remain sluggish, at 2.7%, in 2013, given the continued weakness in Israel's main export markets. The pace of expansion will accelerate to an average of 4.5% a year in 2014-17, helped by rising exports, steady private consumption growth and investment in energy, transport infrastructure and housing. Inflation will remain within the 1-3% target range.
  • The inflation-targeting capabilities of the Bank of Israel (BOI, the central bank) have been reinforced by the passage of a law formalising the goal of price stability, as well as the establishment of a monetary policy committee that will help to smooth the departure of the BOI governor, Stanley Fischer, in June 2013.
  • The current account will remain in deficit in 2013. As a small, export-oriented economy, Israel is heavily dependent on global demand, which will remain weak in the near term. However, world trade will grow more strongly from 2014. The exploitation of offshore gas will also reduce the oil import bill from 2014, bringing the external account into comfortable surplus.

  Country forecast overview: Key indicators

  Key indicators	2012	2013	2014	2015	2016	2017
  Real GDP growth (%)	3.2	2.7	3.9	4.4	5.5	4.3
  Consumer price inflation (av; %)	1.7	1.5	2.3	2.9	2.5	2.1
  Budget balance (% of GDP)	-4.2	-3.7	-2.7	-1.9	-1.0	-0.2
  Current-account balance (% of GDP)	-1.1	-0.2	0.7	1.6	2.9	4.1
  Commercial banks' prime rate (av; %)	4.0	3.5	4.5	5.8	6.3	6.5
  Exchange rate NIS:US$ (av)	3.86	3.82	3.80	3.68	3.60	3.50
  Exchange rate NIS:US$ (year-end)	3.73	3.78	3.71	3.63	3.54	3.44

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  March 05, 2013

View detailed map

Country Briefing

Land area

20,325 sq km. This does not include the Gaza Strip, the West Bank, East Jerusalem and the Golan Heights, areas occupied by Israel in the 1967 and 1973 Middle East wars

Population

7,759,300 (mid-2011; Central Bureau of Statistics estimate), of whom 5,847,700 are Jewish

Main towns

Population at the end of 2007 (provisional data)

Jerusalema: 746,300

Ashdod: 207,300

Tel Aviv-Yafob: 390,400

Petah Tiqwa: 188,900

Haifa: 265,900

Beersheba: 186,600

Rishon le Zion: 224,500

Holon: 169,000

aIncluding East Jerusalem. b Municipality of the city of Tel Aviv-Yafo only, does not include population of greater Tel Aviv conurbation.

Climate

Mediterranean

Weather in Jerusalem (altitude 757 metres)

Hottest month, August, 19-29°C (average daily minimum and maximum); coldest month, January, 6-12°C; driest months, May-September, 0 mm average rainfall; wettest month, January, 133 mm average rainfall

Languages

Hebrew and then Arabic are the official languages; however, English and Russian are also widely spoken

Measures

Metric system. The metric dunum (1,000 sq metres) is also in use

Currency

The New Israeli shekel (NIS) became the official currency on January 1st 1986. 1,000 old shekels=NIS 100. There are 100 agorot in NIS 1

Time

2 hours ahead of GMT

Fiscal year

January 1st-December 31st

Public holidays

All religious holidays begin at sunset the day before. Some institutions also close the day before the major religious festivals. March 8th 2012 (Purim; banks only); April 7th-14th (Passover; first and last days are usually public holidays; these fall on Saturdays in 2012 and April 6th and 13th will see most business closed too); April 26th (Independence Day); May 27th (Shavuot); July 29th (Tisha b'Av; banks only); September 17th (Jewish New Year); September 26th (Yom Kippur); October 1st (Sukkot starts); October 8th (Sukkot ends); October 9th (Simchat Torah); December 9th (Chanukah; school holiday)

January 01, 2013