ECONOMIC SURVEY - 01-Jan-98

January 1, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* PRELIMINARY ESTIMATES: GDP UP BY 2.1%; GDP PER CAPITA UNCHANGED IN 1997
Israel's Gross Domestic Product rose an estimated 2.1% in 1997, while the GDP per capita remained the same in 1997 as at the end of 1996 approximately $17,000 because population growth cancelled out GDP growth, the Central Bureau of Statistics reported in preliminary statistics. The business sector's growth is expected to be 2.0% during 1997, while the industrial sector's growth will be between 2-3%, and the construction sector's will have negative growth of close to 5%. Israel's GDP per capita, having risen in 1996 by 2% and by 4% during both 1995 and 1994, is equal to that of Finland and New Zealand, and higher than that of Greece and Spain.
Central Bureau of Statistics - David Neumann, 972-2-6553400

* PRELIMINARY ESTIMATES: HIGHER GROWTH IN EXPORTS AND SLOWER GROWTH IN IMPORTS LEADS TO IMPROVED BALANCE OF TRADE DEFICIT
Israel's goods and services balance of trade deficit is expected to fall to $9.53 billion in 1997, compared to $11.44 billion in 1996, due to a higher growth in exports as compared to imports, according to preliminary statistical estimates by the Central Bureau of Statistics. Exports of goods and services are expected to rise by 7-8%, while imports are forecast to rise more slowly, by just over 2% in 1997. Export growth was fueled by the electronics, electrical and software industries and rose by 11-12% (excluding diamonds which fell by 2%), and by service exports which also rose by 11-12% (excluding tourism) in 1997. Agricultural exports are expected to show an increase of 18% in 1997, while income from tourism fell by 11%.
Central Bureau of Statistics - David Neumann, 972-2-6553400

*FOREIGN INVESTORS HELD 12.6% OF SHARES ON TEL AVIV STOCK EXCHANGE AT END OF OCTOBER
Foreign investments in shares traded on the Tel Aviv Stock Exchange fell to 12.6% at the end of October 1997 from a high of 12.8% at the end of August 1997, the Bank of Israel reported. This, however, represents an increase over the 11.6% of shares which were held by foreigners at the end of 1996 and the 10.4% of shares at the end of 1995. Foreign investments in private bonds traded on the market rose to 0.4% at the end of October, up from 0.3% in August, while total foreign holdings of traded bonds both government and private at the end of October came to 0.8%, the central bank reported.
Bank of Israel - Gabi Fishman, 972-2-6552712

* FOREIGN INVESTORS BROUGHT $500 MILLION TO TASE IN 1997
Foreign investment in the Tel Aviv Stock Exchange reached $500 million during 1997, according to Yair Orgler, the bourse's chairman. At the end of the year, TASE's general index of shares rose by 21.2% compared to 1996, and offerings worth NIS 7.7 billion were raised during the year (an increase of 178% over 1996). The bourse's daily turnover doubled to NIS 214 million.
Tel Aviv Stock Exchange - Sam Bronfeld, 972-3-5677405

* NON-PROFIT ORGANIZATIONS ACCOUNTED FOR 10% OF GDP
Activities of non-profit organizations in providing services in the health, education, cultural, research, religious and senior citizens spheres (and organizational services for political parties) equaled NIS 35.7 billion 10% of Israel's GDP in 1996 and 13% of Israel's civilian consumption, the Central Bureau of Statistics reported. The bureau reported that 80% of non-profit activities took place in the health and education spheres; 5-6% in each of the cultural, research, and senior citizen care spheres; 4-5% in political party organizations and 1% in the religious life sphere.
Central Bureau of Statistics - David Neumann, 972-2-6553400

DEFENSE INDUSTRIAL SECTOR: