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The Israeli EconomyA Macroeconomic Overview

October 2020

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Debt to GDP Ratio:59.9%

International Trade:

US$135 billion

Export/Import:78.7%

Population: 9.1 million

Inflation Rate:0.6%

Unemployment Rate3.8%

2010

Credit RatingAA- / A1

Member Since

Total GDP:

US$395 billion

GDP Per Capita:US$43,641

GDP Growth:3.3%

Israel in Numbers2019

* Source: Central Bureau of Statistics & OECD

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Real GDP Growth

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

GDP Growth GDP Growth Per Capita

* Source: Central Bureau of Statistics & Ministry of Finance** GDP growth rate for 2020 is estimated by MoF and reflects the impact and consequences of COVID-19

3.7% average GDP growth rate 2010-1019 exceeded OECD, US and EU growth

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20

E

Annual growth rate

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Real GDP GrowthIsrael compared to advanced economies, Annual growth rate

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

OECD European Union U.S. Israel

* Sources: Central Bureau of Statistics, IMF & OECD

Israel experienced higher annual growth rates than most advanced economies

2020E

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Inflation RateRate of change in consumer price index, Annual

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Inflation Change* Source: Central Bureau of Statistics** Dotted lines represent BoI Inflation Target range

Since 2014, the strength of the currency resulted in inflation below the target range

Operation Protective Edge

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Inflation RateIsrael compared to advanced economies

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

OECD European Union U.S. Israel

Israel's inflation rate since 2015 has been consistently lower than the OECD, US and EU inflation rate

* Source: OECD

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Public Debt and Deficit

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E

Public Debt Deficit

As percentage of GDP

Debt-to-GDP ratio declined by more than 10 percentage points over the past decade

* Source: Ministry of Finance

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Decrease in Public Debt, 2010-2019

71%

2010

2019

International comparison, as percent of GDP

Israel is one of only a few countries which reduced their Debt-to-GDP ratio over the past decade

* Source: OECD

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Unemployment and Participation RatesAges 25-64, Annual

72.0%

73.0%

74.0%

75.0%

76.0%

77.0%

78.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2012 2013 2014 2015 2016 2017 2018 2019

Unemployment Rate Participation Rate

* Source: Central Bureau of Statistics** According to CBS definition, the annual participation rate includes employed men and women aged 25-64, and unemployed who have been actively looking for work in the four weeks before conducting the employment survey

During the past decade, the employment participation rate has consistently grown despite the high population rate growth. Theunemployment rate has also consistently declined since 2010 to historically low levels (prior to the Covid-19 outbreak)

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Unemployment RateIsrael compared to advanced economies, Ages +15, 2019

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Israel's unemployment rate during 2019 was amongst the lowest among advanced economies

* Source: OECD

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Private expenditureILS Millions, Annual

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Private expenditure

The Israeli private expenditure grew by a compounded annual growth rate (CAGR) of 5% Since 2010

* Source: Central Bureau of Statistics

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Import and ExportUSD Millions, Annual

-

20,000

40,000

60,000

80,000

100,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Export Import

The Israeli imports grew by a CAGR of 3% and the Israeli exports grew by a CAGR of 1% Since 2010

* Source: Central Bureau of Statistics

COVID-19Impact and Consequences

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Real GDP

-6.0%

-1.0%

4.0%

9.0%

14.0%

19.0%

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

GDP Growth

* Source: Central Bureau of Statistics** GDP growth for 2020 is estimated by CBS and reflects the impact and consequences of COVID-19

The Covid-19 lockdown will lead to negative economic growth this year - a first for Israel.

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20

E

Annual growth rate

COVID-19 OutbreakDot-Com Bubble

Israeli Banks’ stock crisis

Global Financial Crisis

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UnemploymentAges 15+, Annual

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E

The lockdown has led to a sharp increase in unemployment

* Source: Central Bureau of Statistics

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F

State RevenueILS Billions

The Covid-19 lockdown will lead to a drop in state revenues

~60 ILS Billions

income loss

* Source: Ministry of Finance

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Conclusion

Israel is the strongest economy in the East Mediterranean

>3% per annum GDP growth since 2000

$42.2k GDP per capita in 2019, ranked 1st among the East Mediterranean countries

Israel managed to reduce its public debt by over 10 percentage points during the past decade

Israel's 2019 unemployment rate hit historic low of 3.8%

Israel has a successful track record dealing with economic crises

For more information please contact

Ports Unit - GCA

haifaportgca@gca.gov.il

+972 2-5421-552

Privatization of Haifa Port Company Ltd on GCA site (link)

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