The International Monetary Fund's World Economic Outlook estimates Israel's 2007 GDP per capita adjusted for purchasing-power-parity (PPP) to be $31,767 which places Israel in 18th place among OECD countries. Does it indicate a real rise in Israel's GDP ?
The International Monetary Fund's World Economic Outlook estimates Israel's 2007 GDP per capita adjusted for purchasing-power-parity (PPP) to be $31,767. This assessment places Israel in 18th place among OECD countries, close to the OECD average ($32,098), France ($31,872) and Germany ($32,178).
Since this outlook is based on purchasing-power-parity, it is important to analyze it in light of fluctuation in the shekel-dollar exchange rate:
Since the beginning of 2007, the shekel has appreciated sharply against the dollar. At its low point, the dollar traded at 3.93 NIS. While the achievements of the Israeli economy have contributed to the shekel's appreciation, the large US deficit and the slowdown in US growth are the chief causes of the dollar's weakness. During the same period, the shekel-euro exchange rate remained stable.1
Should the dollar strengthen in the future, it would result in a lower assessment of the Israeli GDP per capita.
Economic growth is an underlying driver of Quality of Life, the main focus of the Top 15 Vision.
The Reut Institute contends that in order to reach this vision, Israeli growth must be based on more than transient fluctuations in external drivers. This growth will be become possible by means of flow of capital, an increase in labor force participation and improvement in productivity. Israel lags in this field. During the period 1995-2004, production per hour grow by 26% in the U.S and Sweden, 32% in Finland and 50% in Ireland, while in Israel had only 8% growth.
Tal Levi, The Marker, 8/28/07, full article (Hebrew only).
Gil Siff, The Marker, 9/10/07, full article (Hebrew only).
1 Bank of Israel, Recent Economic Developments, 118, August 2007.