ECONOMIC SURVEY - 24-Dec-95

24 December 1995

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* ISRAEL SPENDS 8% OF GDP ON HEALTH COSTS.
Between 1990-1993, Israel spent 7.8% of its Gross Domestic Product on health costs, the Central Bureau of Statistics announced. When included within the group of 16 OECD countries, Israel was in eighth place in its health spending as a percentage of GDP, similar to health spending in Norway and Belgium. Health spending per capita in 1993 was $1,087, putting Israel in twelfth place, above Ireland, Spain, Portugal, and Greece within the OECD group.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* ISRAEL'S CIVILIAN RESEARCH AND DEVELOPMENT SPENDING AS PERCENTAGE OF GDP FIFTH HIGHEST WITHIN OECD COUNTRIES.
Israel's civilian research and development spending as a percentage of GDP, at 2.3%, was fifth highest among OECD countries in 1993, the Central Bureau of Statistics announced. During 1993, civilian R&D was NIS 4.3 billion, representing 14% of investments in fixed assets, according to the Science and Arts Ministry. Civilian R&D was distributed between the industrial sector, 46%; higher education sector, 35%; the Government, 12%; and non- profit organizations, 7%. Leading the industrial R&D category were investments in electronic equipment, 69% (after rising from 62% in 1987); in transportation, 11-12%; and in chemicals and petroleum products, 11-12%.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* FOREIGN RESIDENTS' INVESTMENT RESERVES IN SHEKEL ACCOUNTS IN THE BANKING SECTOR ROSE TO $275 MILLION IN SEPTEMBER 1995.
Investments by foreign residents in shekel assets accounts, government bonds, private bonds rose to $275 million in September 1995, compared to $114 million at the end of December 1994, the Bank of Israel reported. The majority of the increase was in holdings of government dollar-linked bonds (Gilboa). Investments in shekel assets equal 1.6% of all foreign residents' investments in Israel.
Bank of Israel - Ohad Bar-Efrat, 972-2-6552712

GOVERNMENT SECTOR:

* DECREASE IN INVESTMENT INCENTIVE AMOUNTS WILL LEAD TO AN INCREASE OF NIS 1 BILLION IN INVESTMENTS AND ADD 5,000 MORE JOBS.
The reduction in the level of investment incentives, as decided upon by the Cabinet on 17.12.95, will lead to an increase of NIS 1 billion in investments and the addition of 5,000 new jobs in the economy, according to a study conducted by the Finance Ministry's Budget Division. The study emphasizes that by reducing the amount each approved enterprise project receives, new funding will be freed for other investments, leading to more job creation. The study points out that NIS 300 million will be freed for investment in Development Area A, while NIS 700 million will be freed due to the changes in the investment incentives, which cut the level of grants in Development Areas A and B, and changing tax breaks in the country's center.
Finance Ministry - Eli Yosef, 972-2-317201

* FREE IMPORT OF PROCESSED FOODS TO BEGIN 1.1.96.
On 19.12.95, the Government announced that the free import of processed food goods would begin on 1 January 1996. This announcement follows negotiations between the Finance, Industry and Trade, and Agriculture Ministries. All limits currently in place on these imports will be removed and in their place tariffs will be imposed. These tariffs will be removed in stages by 2003, it was announced. All of this is in accordance with the new GATT treaty, to which Israel is a signatory. Imports of food products rose by 10% in 1995, compared to 1994, to $750 million, while food exports rose by 5% in 1995, compared to 1994, to $590 million, according to the Manufacturers Association's Food and Beverage Division. 41% of the food imports are from the EU, while 20% are from the US. Total sales of processed foods in Israel will reach $8.1 billion in 1995.
Finance Ministry - Eli Yosef, 972-2-317201
Agriculture Ministry - Ronny Hassid, 972-3-6971749
Manufacturers Association - Oded Ben-Ami, 972-3-5198800

* ENERGY MINISTRY AIMS TO CUT PUBLIC SECTOR ENERGY USE BY $1 BILLION DURING NEXT DECADE.
During National Energy Conservation Day on 18.12.95, Energy Minister Gonen Segev announced that his ministry would begin taking steps to curb the increase in energy use by the public sector. These steps are scheduled to save an aggregate of 14 billion kilowatt hours over the next decade, totalling $1 billion, Segev said. According to him, public sector usage of electricity is increasing 10% annually, and electricity usage in 1995 will reach 3 billion kilowatt hours, costing $240 million.
Energy Ministry - Orly Weissberg, 972-2-316133

FOREIGN TRADE: