bank of israel annual report 2008
Download
Skip this Video
Download Presentation
Bank of Israel Annual Report 2008

Loading in 2 Seconds...

play fullscreen
1 / 32

Bank of Israel Annual Report 2008 - PowerPoint PPT Presentation


  • 98 Views
  • Uploaded on

Bank of Israel Annual Report 2008. April 19, 2009. 2008: A Turning Point.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Bank of Israel Annual Report 2008' - anevay


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
2008 a turning point
2008: A Turning Point

Following five years of fast growth, in the second half of 2008 the economy reached a turning point, and the economy went into a recession as a result of the worsening global financial crisis and its increased effects on the local economy.

In the first half of the year the economy continued the same trends that had typified the fast growth period:

High level of economic activity

Low rate of unemployment

Surplus of the current account

High savings rate

Reduction in the debt/GDP ratio

High profits in the business sector

In the last quarter of the year the economy entered a recession:

Sharp decreases in exports and tax revenues

Reduction in private consumption

Labor market: employment expansion came to a halt, wages fell and unemployment began to rise

Inflation turnaround:

Until September – high, as a result of rising world oil and commodities prices and excess demand

After September – dramatic decline as a result of falling world prices and a moderation of the excess demand

2

2008 a turning point cont
2008: A Turning Point (cont.)

3

  • Accelerated rates of inflation in the middle of the year as a result of the closed output gap and increased commodity prices; monetary policy at the time dealt with curbing the rise in inflation.
  • With the worsening of the global crisis since September and the drop in inflation, the interest rate has been reduced dramatically to an unprecedented level in Israel’s history. The Bank of Israel has purchased considerable sums of foreign currency in order to increase the country’s reserves and as a measure to deal with the accelerated currency appreciation; In February 2009 the Bank of Israel began to purchase government bonds to ease credit conditions.
  • The shock to Israel’s financial system was considerable, yet comparatively moderate: Stocks and private bonds fell and spreads in the credit market rose considerably.
    • Banks demonstrated stability
    • The main impact occurred in the non-bank credit market
  • The budget deficit grew and the decline in the debt/GDP ratio slowed as a result of the slowdown in activity and drops in the capital market, which affected tax revenues, and due to further tax reductions.
gdp growth rates in israel were higher than in the advanced economies
GDP Growth Rates in Israel Were Higher than in the Advanced Economies

4

%

-The quarterly data is the seasonally adjusted rate of change from the previous quarter at an annualized rate.

-The growth rate for the advanced economies is a simple average of their individual growth rates (excluding

Luxembourg and Iceland).

Source: OECD Data and the Bank of Israel

steep decline in exports and a drop in private consumption
Steep Decline in Exports and a Drop in Private Consumption

5

%

- The quarterly data is the seasonally adjusted rate of change from the previous quarter at an annualized rate.

- Exports of goods and services excluding support payments

Source: CBS

current account of balance of payments as percentage of gdp 2000 2008
Current Account of Balance of Paymentsas Percentage of GDP, 2000-2008

6

%

Source: Balance of payments, CBS

budget deficit percentage of gdp 2000 2009
Budget Deficit*(Percentage of GDP, 2000-2009**)

%

*Percent of GDP; excluding credit extended. The data refers to the deficit excluding the Bank of Israel’s profits.

**BOI forecast for 2009 is based on the budget that has been approved by the government.

actual and expected rates of inflation
Actual and Expected Rates of Inflation

8

%

The data of “Inflation Expectations” (both annually and quarterly) is the average of the relevant time period.

The quarterly data of inflation is the quarterly average of the Consumer Price Index over the last 12 months.

Source: Bank of Israel

five years of growth what have we gained
Five Years of Growth: What Have We Gained?
  • A rise of 10% in real per capita GDP since 2000 and 15% compared with 2001-02
  • Sustained surplus in the current account
  • A decline in absolute poverty levels, in almost all population groups
  • Increase in the participation and employment levels and a decrease in unemployment in all population groups
  • Improved fiscal environment: reduction in the budget deficit, public debt and public expenditure as a percentage of GDP accompanied by tax cuts

What haven’t we gained?

  • Cyclically adjusted, the declines in deficits have been modest
  • Per capita GDP relative to the U.S. – return to 60% (level preceding the recession)
  • An increase in relative poverty (although it declined in the last two years)
slide11

Per capita GDP

Per capita GDP

(2008 prices, NIS thousands)

Per capita GDPin Israel Relative to the Advanced Economies1 based on Purchasing Power Parities

2(14.9%)

1.The “Per capita GDP” in the Advanced Economies of the OECD excluding Luxembourg and Iceland is the simple

average of their individual per capita GDP.

2. Rate of change between 2001-2002 and 2008

slide12

Overall Unemployment Rate and the Rate for those with 0-10 Years of Education Dropped to Low Levels

Overall

0-10 Years of Education

%

%

Source: CBS, Labor Force Surveys

slide13

Rate of Relative Poverty by Group,a 1997, 2003 and 2007/8b

By education level of head of household (years of schooling)

%

%

By family size

%

By population group

%

By number of earners

a Not including Arabs of Jerusalem

b The data are based on a survey conducted between July 2007 and June 2008

SOURCE: Based on data from Central Bureau of Statistics and Income Surveys

slide14

Rate of Absolute Poverty by Group,a 1997, 2003 and 2007/8b

By education level of head of household (years of schooling)

%

By family size

%

By number of earners

%

By population group

%

a Not including Arabs of Jerusalem

b The data are based on a survey conducted between July 2007 and June 2008

SOURCE: Based on data from Central Bureau of Statistics and Income Surveys

slide15

Fiscal Indicators

Public Expenditure as a Percentage of GDP

Debt/GDP Ratio (gross)

%

%

  • Source: Bank of Israel
unindexed 5 year government bond yields 01 2000 02 2009
Unindexed 5-Year Government Bond Yields(01/2000-02/2009)

17

%

Current Recession

Previous Recession 2001-2003

%

5 Year Israel-U.S. Government Bond Spread* (01/2000-02/2009)

Previous Recession 2001-2003

Current Recession

*Spread between the yields of the 5 year Shahar (derived from the 0-curve) and the 5 year unindexed U.S. Treasury bond.

Source: Bank of Israel and the Federal Reserve Bank of St. Louis

interest rates of the bank of israel the fed and the ecb 2000 2009
Interest Rates of the Bank of Israel, the Fed and the ECB(2000-2009)

18

%

Previous Recession 2001-2003

Current Recession

Source: Bank of Israel Research Department and OECD Statistics

slide19

19

Ratio of Credit in the Market to Business Sector Product

(quarterly data, current prices)

Current Recession

Previous Recession 2001-2003

Source: Bank of Israel

banking system indicators in israel
Banking System Indicators in Israel

20

Capital Adequacy Ratio

Rate of Loan Loss Provision

- Data refers to the end of the relevant period.

Source: Bank of Israel

the nominal and the real exchange rate 2009 1997

21

The Nominal and the Real Exchange Rate2009 - 1997

NIS

Shekel / Dollar Exchange Rate01/97-04/09))

Previous Recession 2001-2003

Current Recession

The Real Exchange Rate by Trading Partners(100=01/1997, 01/1997-04/2009)

Previous Recession 2001-2003

119.8

Current Recession

  • A rise in the index indicates depreciation.
  • The figure for April 2009 is calculated from spot exchange rates known for the half-month, our forecast CPI from the monthly model, and an extrapolation of inflation in the countries whose currencies are in the currency basket.
  • SOURCE: IFS data. For October 2008 to April 2009, Bank of Israel calculations.
development of forecasts of world economic activity in 2009

23

Development of Forecasts of World Economic Activity in 2009

%

* Forecast for world trade in 2009 is a Bank of Israel estimate.

Source: IMF – World Economic Outlook

slide24

24

Annual GDP Growth Rates2008-2010F

%

3.5 to 4.5

1.5 to 2.5

1.5 to 2.5

-0.5 to -1.0

*Forecasts for 2009 and 2010 are given as a possible range.

Source: IMF – World Economic Outlook 03/2009

forecast for main macroeconomic indicators 2008 2010
Forecast for Main Macroeconomic Indicators (2008-2010)

25

Unless otherwise indicated the figures are rates of change.

Source: Bank of Israel Research Department

starting conditions situation on the eve of the recession
Starting Conditions: Situation on the Eve of the Recession

27

*The figure refers to the condition on the eve of the recession (3rd quarter of 2000 and the 2nd quarter of 2008)

**Annual data

Source: Bank of Israel

real wages per employee post for the overall population and for those with 0 10 years of education

29

Real Wages per Employee Post* for the Overall Population and for those with 0-10 Years of Education

NIS

0-10 Year of Education

Overall

NIS

*Real wages per employee posts at 2004 prices

Source: CBS

slide30

30

Overall Employment Levels and Employment Levels for those with 0-10 Years of Education

%

Overall

%

0-10 Years of Education

Source: CBS, Labor Force Surveys

slide31

31

Annual GDP Growth Rates

2000 – 2010*

%

31

*Bank of Israel forecasts

Source: CBS and the Bank of Israel

actual and expected rates of inflation1
Actual and Expected Rates of Inflation

37

%

  • - The quarterly data is the seasonally adjusted rate of change from the previous quarter annualized.
  • Inflation expectation are a 12 month average derived from the capital markets.
  • Source: Bank of Israel
ad