The document provides an economic highlights report from the third quarter of 2011 from the Ministry of Finance of Israel. It includes headlines on recent economic news items, such as Israel's credit rating being upgraded and social protests over the high cost of living. It also summarizes monetary news and capital market activities, press coverage on Israel's innovation and competitiveness, environmental economy agreements and initiatives, and key economic figures. The report aims to keep readers informed on Israel's economic performance and policy developments.

1. STATE OF ISRAEL
MINISTRY OF FINANCE
International Affairs Department
September 2011
Economic Highlights
3rd Quarter 2011
Website: www.financeisrael.mof.gov.il Follow us on Twitter
Email: financeIsrael@mof.gov.il Follow us on Linkedin
Table of Contents
Headlines ......................................................................................................................... 1
Latest News ..................................................................................................................... 2
Monetary News and Capital Market ............................................................................... 4
From the Press ................................................................................................................ 5
Environmental Economy News ...................................................................................... 6
Economic Figures ........................................................................................................... 7
We Welcome Your Feedback.......................................................................................... 8
Headlines
Interview with the Minister of Finance on OECD Observer Page 2
The Committee on Increasing Competitiveness in the Economy has Page 2
submitted its interim recommendations
Standard & Poor's Upgraded Israel's Credit Rating to 'A+' Page 4
Israel Ranked 22nd in Global Competitiveness Report for 2011-2012 Page 5
Israel Praised for its Innovation and Entrepreneurship Page 5
Agreement for the Construction of a Desalination Plant in Ashdod Page 6
-1-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

2. Latest News
Israel's Prospectus for OECD Observer Q2 2011 Special
2010 available on our Focus on Israel Interview with Israel's
website summarizes the Minister of Finance articles on Israel's
Israeli economic and financial economic strategy, banking sector, start-
positions. ups, and more.
Prospectus 2010 Read More
The Committee on Increasing Competitiveness in the Economy has submitted its interim
recommendations
The Committee on Increasing of Competitiveness in the Economy, appointed by the Prime
Minister, the Minister of Finance and the Governor of the Bank of Israel has concluded the
interim stage of the formulation of its recommendations at the end of September. The
Committee has been requested to examine the effect of the existing structure of the
economy on the level of competition in the various sectors of the economy, on its financial
stability and on its economic efficiency. The Committee has been asked to recommend
advisable policy measures with emphasis on the control of real companies over financial companies, the control
of a public company using a pyramid holding structure and the manner of the allocation of public assets.
Full Press Release Presentation on the Principal Recommendations of the Committee
(Source: Ministry of Finance, Prime Minister's Office)
Social Protests over the Cost of Living Sweep Israel
The last three months were times of unseen social protests over the cost of living in Israel. The
government established a special committee to address the problems raised by the public.
After several specific demonstrations over prices of several products in Israel, such
as the price of fuel and the price of cottage cheese, a protest over housing prices in
Israel evolved into a cross-nation general protest over the cost of living, including
the cost of basic grocery consumption products, housing, the price of raising
children, and more. What began as a small protest tent in Tel Aviv's luxurious
Rothschild Boulevard evolved into major "tent cities" all across the country.
The protest movement was comprised of institutional bodies such as the students'
union, as well as non-institutionalized sub movements. This coalition of movements
carried out massive demonstrations calling for social justice. The biggest
demonstration so far was held on September 3, with estimations of more than
400,000 participants across Israel. 400,000 people are no less than 5% of Israel's
total population.
On August 7, Prime Minister Benjamin Netanyahu appointed a professional
committee for socio-economic change, chaired by Prof. Manuel Trajtenberg, in
order to hold a broad dialogue with different groups and sectors within the public,
listen to the distress and to proposals, and make recommendations that will be
submitted to the Social and Economic Cabinet chaired by the Minister of Finance,
Dr. Yuval Steinitz. The Trajtenberg Committee for Socio-Economic Change is
comprised of government officials, academia representatives and social
entrepreneurs.
(Source: Ministry of Finance, Prime Minister's Office, Ynet)
-2-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

3. Investment Commitments for More than NIS 400 Million Received from Institutional
Bodies in Israel to Encourage Institutional Investments in the High-Tech Industry
Just 7 months after launched, the program to encourage investments by institutional
bodies in high-tech has succeeded in garnering institutional commitments for investing
more than NIS 400 million in venture capital funds. The stated goal was to raise a sum of
NIS 800 million from Israeli institutional bodies during the years 2011-2013.
Full Press Release
(Source: Ministry of Finance)
USD 400 Million Raised by the Accountant General in a Private Placement to One of the
World's Largest Asian Investor
The Accountant General at the Ministry of Finance has completed a USD 400 million
private placement of one-year government bonds to one of the world's largest Asian
investors, who is considered to be a strategic investor in the global capital markets and for
whom this is the first investment in Israeli government bonds.
Full Press Release
(Source: Ministry of Finance)
Bill for Promoting Competition in the Credit Card Market Approved
The Knesset approved the bill submitted by the Ministry of Finance to amend the Banking
(Licensing) (Clearing Credit Card Transactions) Law. The bill is intended to correct failures
in the Israeli credit card market and to increase competition in the clearing sector, and is
expected to reduce payments transferred by business owners to the credit card companies,
with a resulting reduction in product prices for the consumer.
Full Press Release
(Source: Ministry of Finance)
Tax Treaties Signed between Israel and Malta and initialed with Panama
A treaty for the avoidance of double taxation has been signed between Israel and Malta,
and a treaty for the avoidance of double taxation has been initialed between Israel and
Panama. The treaties signed include a clause for the exchange of information between the
tax authorities of both countries and Israel, based on the model treaty of the OECD. The
treaties will enter into effect on completion of ratification proceedings in the two countries.
Full Press Release
(Source: Ministry of Finance)
Government Companies OECD Report Finds: Israel Tops
Authority Published its all other OECD Countries in
Report for 2010 The report Venture Capital According to
indicates an increase of Entrepreneurship at a Glance 2011,
approximately NIS 3 billion in Israeli venture capitalists allocate more
revenues compared to 2009. financing to young firms than other OECD members.
Press Release OECD Press Release on the Entrepreneurship at
Presentation on the Report a Glance 2011 report, mentioning Israel
-3-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

4. Monetary News and Capital Market
Standard & Poor's Upgraded Israel's Credit Rating to 'A+'
This action reflects S&P's view of Israel's improved economic policy flexibility, as a result of strong
growth and careful macroeconomic management.
Standard & Poor's Ratings Services (S&P) raised its long-term foreign currency
sovereign credit ratings on the State of Israel to 'A+/A-1' from 'A/A-1'. At the
same time, S&P affirmed the local currency ratings at 'AA-/A-1+'. Also, S&P's
outlook is stable, and the transfer and convertibility (T&C) assessment remains
at 'AA'.
S&P first upgraded Israel's credit rating to 'A' in 2007. In January 2009, it reaffirmed its decision, further
giving Israel's market a "solid" forecast. This August, S&P reiterated its A/A-1 sovereign credit rating for
Israel with a "Stable" outlook. However, in line with the downgrade of the US credit rating from AAA to
AA+, S&P downgraded US guaranteed Israeli government bonds to AA+. With the decision to reiterate
Israel's credit rating for 2011, S&P joined the two other major credit rating firms, Moody's and Fitch, as
Moody's left Israel's A1-Stable rating unchanged, and Fitch ratings left Israel's A Stable rating unchanged.
Then, S&P decided this September to raise Israel's credit rating to A+.
The decisions by all three major credit rating agencies to leave Israel's rating unchanged, and especially
S&P's latest decision to raise Israel's rating, provide Further Significant Support for the Israeli
Government's Economic Policy.
Minister of Finance, Dr. Yuval Steinitz, noted that "this is an impressive credit given to the Israeli
economy and its successful coping with the global economic crisis. This achievement of credit upgrade is
especially unique given the debt and massive unemployment crisis, which hurt many economies' credit
rating." Minister Steinitz also noted that "the fact that S&P mentioned the latest natural gas findings as a
point of strength for the Israeli economy indicated the importance of the work done by the Committee to
Examine the Fiscal Policy on Oil and Gas Resources in Israel, Headed by Prof. Eytan Sheshinski." The
minister added that "Israel cannot rest on its laurels, as the on-going global crisis demands us to keep our
budget frameworks and economic policies.
Aa3/AA-
A1/A+
A2/A
A3/A-
Baa1/BBB+
Baa2/BBB
Baa3/BBB-
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
Moody's S&P Fitch
Read More
(Source: Ministry of Finance, Standard & Poor's, Globes, Ynet)
-4-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

5. From the Press
Israel Ranked 22nd in Global Competitiveness Report for 2011-2012
Israel climbed 2 ranks from the previous Global Competitiveness Report of 2010-2011,
nd
from 24th to 22 . among Israel's main strengths are capacity for innovation, high number of
patents and availability of venture capital, which has "further contributed to making Israel an
innovation powerhouse". According to the report, these elements have become stronger in
the past year.
Read More
(Source: Ministry of Finance, World Economic Forum)
Israel Praised for its Innovation and Entrepreneurship
During the last 3 months, Israel was praised by several media and news networks from around the
world for its innovation and enrepreneurship. Following are several selected items:
CNBC: Innovation Nation
CNBC describes Israel as a "small country of 7 million that has become a hi-tech
powerhouse", and reports on "why its talent for enterprise is pivotal to Israel's
future".
The Telegraph: Israel, the Start Up Nation, is Taking-on Silicon Valley
The Telegraph reports that Israel's strong technology start up scene has "correctly
earned the tiny state its growing reputation as the world’s second Silicon Valley".
Channel 4: The New Sillicon Valey
Britain's Channel 4 reports on Israel as the new sillicon valley, mentioning israeli
innovations in the technology world, Israel's R&D spendings (as a % of GDP), high-
tech sector, venture capital attraction, and more.
Wired UK: Europe's Hottest Startup Capitals: Tel Aviv
According to Wired UK, Tel Aviv is a hotbed of innovation, and so is included in their
European Startups list. The report mentions, among others, the role of the Israeli
military and the mandatory service in Israel as a major source of innovation,
(Source: CNBC, Channel 4, The Telegraph, Wired UK)
Hebrew University Ranked 57th in the World, Weizmann Institute named "Best Place to
Work in Academia outside the United States"
th
The Hebrew University of Jerusalem has been ranked 57 in the 2011
Academic Ranking of World Universities (ARWU), conducted annualy
by Shanghai Jiaotong University. Also, the Weizmann Institute of
Science has once again been named "best place to work in academia
between international institutions" in The Scientist magazine's annual
survey.
(Source: Academic Ranking of World Universities, The Hebrew University of Jerusalem, The Scientist , Weizmann Institute of Science)
-5-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

6. Environmental Economy News
Agreement for the Construction of a Desalination Plant in the City of Ashdod
The Ministries of Finance and National Infrastructures signed an agreement for the Ashdod
desalination project with Mekorot Development & Enterprise, which will plan, build and
operate the plant. The Ashdod plant is expected to produce 100 million cubic meters per
year, and on its completion, desalination plants will supply around 75% of the domestic
water consumption.
Full Press Release
(Source: Ministry of Finance, Ministry of National Infrastructure)
Experts Call Israel a ‘Laboratory’ for Eco-Innovation
“Israel is a laboratory of innovative policies and practices in many areas, including
technologies, financing and project management,” said Mr. Jan Kubis, UN under-secretary
general and executive secretary of the UN Economic Commission for Europe, during a
special conference held by the commission in Tel Aviv this July. The conference included
members of the UN Economics Commission, Israeli contributors and other experts from
across the globe, who agreed that “Israel is a laboratory” for eco-innovation and can serve
as a platform for larger countries looking to harness sustainable technology.
(Source: Jerusalem Post)
Memorandum of Understanding (MoU) on Water Technologies Cooperation Singed with
the Brihanmumbai Municipal Corporation (BMC) in India
The government, through the Ministry of Industry, Trade and Labor, will share with BMC its
expertise on water management related issues, relevant technologies, research and
.private sector colaborations. Indian officials mentioned that Israeli water technology is a
platform for them to interact with "some of the world's most innovative and technology
driven companies as they are the global leaders in the water arena".
(Source: Ministry of Industry, Trade and Labor, IBNlive)
Cabinet approved renewable energy Israel Adopts Green Building
target of 10% by 2020 Standards
Israel has become the latest to announce an The Ministry of Environmental Protection and the
ambitious target for renewable energy, as this Israel Standards Institution launched a national
July the cabinet voted through a package of green building standard (Standard 5281). The
measures designed to ensure the generation of Standard includes 9 fields: energy, land, water,
10% of energy from renewable sources by 2020. building materials, health and welfare, waste,
The plan would result in over USD 5 billion of transport, construction site management and
investment and deliver 1,550MW of renewable innovation. The standard is in line with advanced
electricity capacity by the end of 2014 and international standards, yet adapted to Israel’s
2,760MW by 2020. climatic conditions and construction methods.
(Source: Prime Minister's Office, Ministry of Industry, Trade (Source: Ministry of Environmental Protection, EarthTechling)
and Labor, BusinessGreen)
-6-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

7. Economic Figures
Economic Data
Data is calculated at an annual Year-on-Year rate of change
Data from previous editions is constantly being updated
See more extended economic data in our Economic Highlights PowerPoint Presentation
2009 2010 Q1 2011 Q2 2011
GDP Growth 0.8% 4.7% 4.6% 3.3%
Business GDP Growth 0.2% 5.4% 5.2% 1.9%
Private Consumption Growth 1.4% 1.4% 9.0% 2.2%
Public Consumption Growth 2.2% 2.2% 2.9% -4.4%
GDP Per Capita, Based On PPP For 2009: 29,531$
Consumer Price Index
In 2010 prices
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011
101.0 101.3 101.4 101.8 102.0 102.3 102.5 103.1 103.6 104.0 103.7 104.2
105
104
103
102
101
100
99
9.2010 10.2010 11.2010 12.2010 1.2011 2.2011 3.2011 4.2011 5.2011 6.2011 7.2011 8.2011
Foreign Trade
Goods and Services
2009 2010 Q1 2011 Q2 2011
Import Growth -14.1% 12.6% 28.9% 13.6%
Export Growth -12.5% 13.6% 12.0% 3.4%
(Source: Ministry of Finance, Central Bureau of Statistics, IMF)
-7-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il

8. Balances
2010 Q1 2011 Q2 2011
Current account Surplus 2.9% 0.6% -0.9%
As % of GDP
Budget Deficit 3.7% -- --
Central government
Gross Debt (% of GDP) 76.3% -- --
General government gross financial liabilities
Investments
2010 Q4 2010 Q1 2011 Q2 2011
Gross Domestic Capital Formation 1.9% 20.8% 37.0% 14.1%
Gross Investments in Fixed Assets 12.6% 19.6% 26.1% 8.8%
Gross Israeli Investments Abroad (Billion$) 27.7$B 10.1$B 5.8$B 4.6$B
Gross Foreign Investments in Israel (Billion$) 17.6$B 6.9$B 5.2$B 6.4$B
Gross Foreign Direct Investments (Billion$) 5.2$B 2.4$B 2.2$B 1.6$B
See more extended economic data in our Economic Highlights PowerPoint Presentation
(Source: Ministry of Finance)
We Welcome Your Feedback
Mr. Roni Hershkovitz
Follow us on Twitter Director
Overseas Economic Information
Follow us on Linkedin International Affairs Department
Ministry of Finance
Subscribe our RSS Feeds Jerusalem
Israel
Subscribe our Newsletters
Mr. Assaf Luxembourg
Write us an Email Overseas Economic Information
International Affairs Department
Ministry of Finance
Visit our Website
Jerusalem
Israel
-8-
1 Kaplan St. Jerusalem 91030, P.O. Box 3100, Tel: 02-5317200, Fax: 02-5695349
English: www.financeisrael.mof.gov.il Hebrew: www.mof.gov.il