ECONOMIC SURVEY - 29-Apr-98

April 29, 1998

(COMMUNICATED BY GPO ECONOMICS DESK)

MACRO-ECONOMIC SECTOR:

* GDP PER CAPITA INCREASED BY ALMOST 500% SINCE 1950
Israel's Gross Domestic Product per capita increased by almost 500% since 1950 to reach $17,000 in 1997, the Central Bureau of Statistics reported. At the founding of the State, Israel's GDP per capita equaled 30% of that of the United States. In 1997, this figure equaled 65% of the USA's GDP per capita. The study was conducted using "Purchasing Power Parity" analysis which includes comparative prices of local goods and services as well as international prices. From 1950-1997, Israel's GDP grew by an annual average of 7%. From 1950-1965, labor production grew by an annual rate of 12%; from 1966-1972 between 5-6%; and during the past few years between 0-2% annually. The use of resources available to the economy also changed over the years. During the founding years, 25% of the resources available went towards investments, whereas in 1997 this figure was only 15%. In 1997, approximately 22% of all resources went towards export production, whereas in 1950, this figure was 3%.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2- 6553400

* ISRAEL'S POPULATION: 5.94 MILLION
Israel's population on its fiftieth Independence day is 5.94 million, according to the Central Bureau of Statistics. This represents an increase of more than 5 million since the founding of the state in 1948. By the end of 1998, the population will broach 6 million. Statistics show that 43% of the population growth was due to immigration. Out of the world's total Jewish population, 36% of world Jewry lives in Israel, compared to only 6% in 1948. During the first decade, the population rose by an annual average of 8%, whereas during this decade, the population increased by an average of 3% annually. Approximately 4 million children have been born in Israel since its founding. In 1998, 35% of Israel's population is under the age of 18, highest among developed nations which average between 19-25%, according to UN statistics. Population density has risen from 43 persons per square kilometer in 1948 to 260 persons per kilometer (excluding Israelis living in Judea, Samaria, and the Gaza Strip). Only Holland and Belgium in Europe have higher population densities.
(www.cbs.gov.il)
Central Bureau of Statistics - David Neumann, 972-2- 6553400

GOVERNMENT SECTOR:

* FOREIGN CURRENCY CONTROLS LIBERALIZED
All foreign currency restrictions on households and the business sector are abolished, except for those applicable to institutional investors and derivatives transactions of non-residents, the Bank of Israel, Prime Minister's Office and Finance Ministry announced on 28.4.98. The restrictions will be lifted in a matter of days, as soon as the directives can be implemented. This decision is in line with the Prime Minister's declaration of 13.8.97 in which the foreign currency regime would be liberalized during Israel's 50th anniversary. The entire foreign currency regime liberalization program for businesses and households began in the late 1980s, and this change will allow citizens to enjoy the complete freedom to engage in transactions with non-residents in both foreign and local currency. The program is expected to increase competition in financial services sector, reduce financing costs and encourage foreign investment, thereby further integrating Israel into the global economy.
(www.bankisrael.gov.il,
www.mof.gov.il) Bank of Israel - Gabi Fishman, 972-2-6552712
Finance Ministry - Eli Yosef, 972-2-5317201

* NEGOTIATIONS TO OPEN NEXT WEEK ON ISRAEL JOINING EU'S FIFTH FRAMEWORK FOR RESEARCH AND DEVELOPMENT PROGRAM
Israel and the European Union will begin negotiations next week on Israel's joining the EU's Fifth Framework for R&D which is scheduled to begin in 1999, the Industry and Trade Ministry announced. During the four years of the program, Israel's contribution is tentatively set at $150 million, according to the ministry. Israel's participation in the program is expected to open up new areas of technological cooperation with European governments as well as with the Continent's private sector, and will help Israeli companies take advantage of their competitive advantages in various sectors, Industry and Trade Minister Natan Sharansky said.
(www.tamas.gov.il)
Industry and Trade Ministry - Haya Peri, 972-2-6220430

PRIVATE SECTOR:

* PUBLIC HOLDS 38% OF TEL AVIV 100 INDEX COMPANIES' SHARES
The public holds 38% of the shares of companies traded on the Tel Aviv 100 index on the Tel Aviv Stock Exchange (TASE), the bourse reported. This figure does not include companies which are currently undergoing privatization such as Bezeq, Israel Chemicals, Bank Hapoalim, Bank Leumi and Israel Discount Bank. If these companies are included, the figure drops to 25%. During 1997, the government's holdings in companies whose shares are traded on TASE fell to 11.3% from 16.5% in 1996.
(www.tase.co.il)
Tel Aviv Stock Exchange - Irit Harel, 972-3-5677405

DEFENSE INDUSTRIES SECTOR: