Economy and Tourism

Background conditions

Inflation data: The Consumer Price Index (CPI) for March increased by 0.2 percent, and for April it increased by 0.4 percent—both months in line with forecasts. Over the past 12 months, the CPI increased by 0.8 percent, below the lower bound of the inflation target range. The main factors contributing toward a decline in the CPI in the past year were the appreciation of the shekel, declines in energy and cellular communications prices, and expansion of the Free Education Law to children from the age of three. In contrast, the main contributions to an increase in the CPI over the past year were prices of food and housing, and increased taxation and electricity prices.
Inflation and interest rate forecasts: Inflation expectations from various sources were around 1.7 percent at the time (two weeks ago) of the unscheduled Monetary Committee decision to reduce the interest rate and implement a plan to purchase foreign exchange in order offset the effect of gas production. After the Committee’s decision and the April CPI were published, inflation expectations from the various sources increased slightly, and are now slightly below the midpoint of the target range. Inflation expectations for terms of 2 years and longer (monthly averages) range from 2.3 percent to 2.5 percent. The expected increases in VAT and in electricity prices are expected to lead to higher prices in coming months, though the recent declines in prices of commodities and energy are expected to act to lower prices. Expectations for the Bank of Israel interest rate one year from now derived from various sources range between 1.3 percent and 1.45 percent.

Real economic activity: 
Updated indicators of economic activity which have become available so far indicate continued moderate growth in the first quarter, and a mixed trend in April. Based on National Accounts data, the GDP growth rate in the first quarter of 2013 was similar to the average growth rate over the previous 4 quarters, about 2.8 percent in annual terms. Growth in goods and services exports and in private consumption expenditure contributed to GDP growth. Investment in the principal industries declined by 19.3 percent, continuing declines of 11.6 percent and 6.9 percent, respectively, in the previous two quarters. Exports of goods and services increased by 5.6 percent—after declines of 10 percent and 5 percent, respectively, in the previous two quarters—bringing the figure back to the level it was at in the first quarter of 2011. In contrast to National Accounts data, the Climate Indices which are derived from the Business Tendency Survey of the Central Bureau of Statistics, and the Composite State of the Economy Index of the Bank of Israel indicate an increased rate of growth compared with the previous quarter. The government’s budget plan, should it be approved by the Knesset, is expected to reduce the deficit target from 4.65 percent of GDP in 2013 to 3 percent of GDP in 2014. This decline, while regaining budgetary control, is expected to moderate the growth rate of demand.

The labor market: 
Labor force survey data for the first quarter indicate a continued decline in the unemployment rate with a slight increase in the employment rate. In the first quarter, the unemployment rate declined to 6.5 percent (a decline of 0.3 percentage points) and the employment rate increased to 59.5 percent (an increase of 0.1 percentage points). The number of employed persons increased in the first quarter by 0.7 percent compared with the final quarter of 2012. It appears that in the past year the employment rate has stabilized at a high level, after increasing rapidly in the previous two years. The stability in employment in the past two months is reflected as well in the number of employee posts, which remained unchanged in the private sector in February, while the number of posts in the government sector increased by 0.3 percent. Nominal wages declined by 0.1 percent, and real wages declined by 0.4 percent, in January–February compared with the fourth quarter of 2012, based on seasonally adjusted data. Health tax receipts by the National Insurance Institute, which provide an indication of nominal wage payments, were 4.4 percent higher in March–April than in the corresponding period of the previous year, reflecting a slowdown in the growth of wages compared with the preceding 2 month period, when there was an average year over year increase of 5.7 percent.
Budget data: In April, the government continued to operate without an approved budget framework and in accordance with the law allowing it to spend 1/12 of the overall 2012 budget each month in 2013 (including debt repayments), until a budget framework is approved. On May 5, 2013, the government approved increased expenditure in 2013 of about NIS 6.5 billion more than that derived from the fiscal rule, as well as an increased deficit ceiling, to 4.65 percent of GDP. Cumulative tax receipts for the year to date are about NIS 2.5 billion below the seasonal path consistent with revenue projections. In April, the domestic deficit was about NIS 2.5 billion, about NIS 0.7 billion lower than the seasonal path consistent with achieving the new deficit target. The cumulative deficit from the beginning of the year is about NIS 5.7 billion, about NIS 0.4 billion lower than the seasonal path consistent with the deficit ceiling of 4.65 percent of GDP.

The foreign exchange market: 
From the monetary policy discussion on March 24, 2013, through the unscheduled discussion on May 12, 2013, the shekel appreciated by about 2.9 percent against the dollar and by 2.2 percent against the euro. In terms of the nominal effective exchange rate, the shekel appreciated by about 2.8 percent during the period. Since that date, the shekel has weakened by about 3.9 percent against the dollar, by 3.5 percent against the euro, and by 3.2 percent in terms of the nominal effective exchange rate. Since May 12, most currencies weakened against the dollar, though most of them by less than the shekel.

The capital and money markets:
 From March 24, 2013, through May 24, 2013, the Tel Aviv 25 Index declined by 2percent. Yields on government bonds declined sharply, and the yield differential between 10-year Israeli government bonds and equivalent 10-year US Treasury securities contracted by about 60 basis points, to 150 basis points. Makam yields declined along the entire curve, with declines of up to 20 basis points since the announcement of the interest rate reduction. One-year yields declined to 1.32 percent during the period. Israel's sovereign risk premium as measured by the five-year CDS spread declined during the period from 121 basis points to 100 basis points, but increased again this month to 116 basis points. The Tel-Bond 60 Index increased markedly by about 3.2 percent over the period. Spreads in the corporate bond market narrowed, primarily for debt issued by companies with lower ratings.

The money supply: In the twelve months ending in April, the M1 monetary aggregate (cash held by the public and demand deposits) increased by 8.9 percent, and the M2 aggregate (M1 plus unindexed deposits of up to one year) increased by 6.7 percent.

Developments in the credit markets
: The shekel’s appreciation was the main factor in the 0.9 percent decline of business sector debt in March, to NIS 778 billion. Bond issuance by the nonfinancial private sector in March–April averaged NIS 1.7 billion per month, compared with NIS 3.3 billion, on average, in the first two months of the year. Total outstanding credit to households increased in March by 1 percent compared with February, to NIS 389 billion. The balance of credit for housing continued to increase, to NIS 274 billion in March, an increase of 0.8 percent compared with February.
The total volume of new mortgages granted was NIS 3.8 billion in March and NIS 4.1 billion in April, similar to levels in recent months of about NIS 4 billion per month. Interest rates on new fixed rate, CPI-indexed mortgages declined in April, while the interest rate on variable rate mortgages remained stable. It appears that the Banking Supervision Department’s directives had an effect on purchasers of homes for investment. The rate of mortgages granted to investment home purchasers with high LTV ratios (60–90 percent) declined from about 37 percent in November 2012 to around 9.5 percent in March 2013. Likewise, the size of the average mortgage taken out for purchasing an investment home declined during the same period by 20 percent, compared with stability in the average size of mortgages overall.

The housing market: The housing component of the CPI (based on housing rents) increased by 0.9 percent in April, continuing an increase of 0.8 percent in March. In the twelve months ending in April, this component increased by 3 percent, compared with an increase of 2.9 percent in the twelve months ending in March. Home prices, which are published in the Central Bureau of Statistics survey of home prices but are not included in the CPI, increased in February–March by 0.5 percent, continuing an increase of 1.4 percent in January–February. The rate of increase in home prices continues to rise. In the twelve months ending in March, home prices increased by 10.5 percent, compared with an increase of 10.1 percent in the twelve months to February.
There were 39,330 building starts in the 12 months ending in February, and this is expected to continue to support a high level of stock of homes. At the same time, this is still lower than the rate in 2011.

The global economy: The global economy continued to present a mixed macroeconomic picture in the past two months. Macro data published recently in the US were mostly positive and indicated a moderate improvement. In the eurozone, data indicated deepening recession, while in China, the data pointed toward a more significant than expected slowdown. In April, the IMF revised its 2013 growth forecast downward for most major economies. Projections were lowered by 0.2 percentage points for the global economy, to 3.3 percent, for the US economy, to 1.9 percent, and for the eurozone, to -0.3 percent. The growth forecast for China was reduced by 0.1 percentage points, to 8 percent. According to the IMF, the main risk remains the situation in Europe, with improvement there expected to be slow, as it continues to suffer from restraining budgetary policy and from a low supply of bank credit. The medium term risks include recession in Europe, fiscal crisis in Japan, and slower than expected growth in developing economies. Against the background of the economic picture, many central banks continued accommodative monetary policy—quantitative easing plans continue in the US, the ECB reduced its interest rate to a record low of 0.5 percent as the bank’s president noted that he does not rule out a further interest rate reduction, and the Bank of Japan announced at the beginning of April that it would double the rate of its planned bond purchases (a step which reinforced the weakness of the yen and apparently led other central banks to reduce the interest rate and intervene in foreign exchange markets). Inflation in major economies declined.
 The main considerations behind the decision

The decision to reduce the interest rate for June 2013 by 0.25 percentage points, to 1.25 percent, is consistent with the Bank of Israel's interest rate policy, which is intended to entrench the inflation rate within the price stability target of 1–3 percent a year over the next twelve months, and to support growth while maintaining financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.
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Over 60 leading women from across the world joined together last month for a panel discussion showcasing Israeli females in the lead.
Organized by The Israel Project (TIP) and the Embassy of Cyprus in Israel, the event served as a platform to discuss and understand the challenges and opportunities facing women in Israeli society in the modern age.
Among the panelists were popular journalist Judy Shalom Nir-Mozes. Former IDF commander Miri Eisin and Israeli Olympic athlete Maayan Davidovich.

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Prime Minister Benjamin Netanyahu, Greek Prime Minister Alexis Tsipras and Cypriot President Nicos Anastasiades, today (Thursday, 15 June 2017), in Thessaloniki, at the third trilateral summit, signed joint statements for the continued strengthening of relations.

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A senior delegation from Tanzania, headed by Dr. Aloyce Nzuki, Permanent Secretary Ministry for Natural Resources and Tourism, arrived in Israel for a series of meetings and events designed to increase cooperation with the Israeli tourist industry, and encourage Israeli tourism and investments to enchanted, exotic Tanzania.

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At a festive ceremony attended by Minister of Education Naftali Bennett, the Lauder Dormitory Building was inaugurated today at the Technion
state of the art building was donated to the Technion by World Jewish Congress President Ronald Lauder and his wife Jo Carole

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09 June 2017 – Jerusalem) The U.S. Permanent Representative of the United States to the United Nations Nikki Haley visited Yad Vashem today. The Ambassador was guided through the Holocaust History Museum by Dr. Robert Rozett, Director of Yad Vashem Libraries, participated in a memorial ceremony in the Hall of Remembrance, visited the Children's Memorial and signed the Yad Vashem Guest Book.

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On Wednesday evening, June 7th, the Embassy of Slovenia in Tel Aviv celebrated 26 years of independence, and 25 years of bilateral relations with Israel. The commemoration was held at the Peres Center for Peace and Innovation in Jaffa. The event was timed to coincide with visits by both the Minister of Education, Science and Sport Dr. Maja Makovec Brencic, and a high-level parliamentary delegation led by National Assembly President Dr. Milan Brglez.

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President Reuven Rivlin today (Wednesday) met at his residence in Jerusalem with United States Permanent Representative to the United Nations, Ambassador Nikki R. Haley.

President Rivlin welcomed her and said, “You are a dear friend of Israel. We appreciate your strong stand on the world’s most important stage, in support of the security of the people and the State of Israel. With your support we see the beginning of a new era. Israel is no longer alone at the UN. Israel is no longer the UN’s punching bag.”

He continued, “When I spoke at the UN on Holocaust Memorial Day, I said that the UN must learn from the lessons of the past, and stand up against hatred and racism. I said it must end its obsession with targeting Israel. Progress has been made. Israel’s standing at the UN has improved. But sadly, we have a long way to go. Both in holding to account, public statements made by officials, and in supporting regulation to reduce the ridiculous number of discussions and resolutions against Israel. This is also true in the Human Rights Council - which has been hijacked as a weapon against Israel - and in UNESCO, where they seek to rub out the history of the Jewish people.”

The President thanked the Ambassador for her great contribution to the State of Israel, and said, “Ambassador Haley, as the representative the US - Israel’s greatest and strongest ally - we appreciate very much your support of Israel, and all you do to stand up for the values of freedom and democracy which we share. Welcome to Israel, welcome to Jerusalem.”

Ambassador Haley thanked the President for his warm welcome and said, “Thank you Mr. President for taking the time to meet with us, it is an absolute thrill to be here in Israel, I so much appreciate the support we have received from the people of Israel. But I feel somewhat guilty because all I did at the United Nations was tell the truth. I have never taken kindly to bullies, and the UN has bullied Israel for a very long time, and we are not going to let that happen anymore. It is a new day for Israel in the United Nations. We just got back from Geneva, talking about the Human Rights Council and hopefully it will be a new day at the Human Rights Council when it comes to Israel.”

She concluded by saying she was greatly looking forward to her visit to Israel and said, “I am looking forward to taking in the history, the beauty, the tradition, and all that comes with the magic of Israel. Thank you very much for having me it is a pleasure to be here.”

Photo credit: Mark Neiman (GPO)

Friday was a beautiful late spring day; the gardens were lovely, the weather was fine; the guests were elegantly attired; the refreshments were generous and delicious; all the makings of a happy celebration marking the National Day of Sweden. H.E. Carl Magnus Nesser, ambassador of Sweden to the State of Israel, hosted the event at the ambassadorial residence in Herzlia Pituach.

The event was attended by many Swedish nationals living in Israel; Swedish music, Swedish food, Swedish sponsors and a generous open bar – all the makings of a happy event.

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A fundamentally agricultural holiday, Shavuot commemorates the custom of bringing offerings to the Holy Temple from the first fruits of the harvest and the first animals born to the flocks.

Shavuot, the Holiday of Weeks, is one of the three pilgrimage holidays, along with Pesach and Sukkot. These are the holidays on which the whole Jewish people would come to Jerusalem​ in ancient times, when the Holy Temple was there, and would offer animal and grain sacrifices.

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Tel Aviv Eat presents three evenings of tastings and workshops featuring the region’s leading restaurants and most prominent chefs. Entrance is free (including the chefs’ demonstrations), and tasting portions range in price from NIS 20-35. Doors open each evening at 18.00. There are several performance stages, live music, and stands selling beer.

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"Only when we remember the families who were torn apart from everyone they loved, who suffered that terrible darkness and evil, who had endured the unbearable horror of the Holocaust, only then can we prevent this agony from ever repeating." President Donald J. Trump

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The Charles Bronfman Auditorium at Habima Square is one of the centerpieces of the Israeli arts and cultural scene, home to the Israel Philharmonic for the last 60 years. On Friday, May 19th, it was home to yet another historic event, with the dedication of the entrance hall to Miri Shitrit of blessed memory.

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President Reuven and First Lady Nechama Rivlin today, (Monday), welcomed President of the United States Donald J. Trump, and First Lady Melania Trump on arrival at Ben-Gurion International Airport, and then at the President’s Residence in Jerusalem.

On his arrival at the President’s Residence, President Trump signed the official guest book and wrote, “It is such a great honor to be in Israel and be with all of my great friends”.

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  Prime Minister Benjamin Netanyahu and his wife Sara, today (Monday, 22 May 2017), at Ben-Gurion International Airport, welcomed US President Donald Trump and his wife Melania with an honor guard.

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President Reuven Rivlin on Tuesday , at a ceremony at the President’s Residence in Jerusalem, received the diplomatic credentials of the new Ambassadors to Israel from Thailand and Spain. Each ceremony began with the raising of the flag and the playing of the national anthem of the visiting country, and - after the presentation of the credentials - the signing of the guest book, before the playing of Israel's national anthem 'Hatikva'.

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