The Finance Ministry's research department on Tuesday released its macroeconomic review of key trends in the economy Tuesday confirming that the growth seen in Israel since mid-2003 intensified last year.
Outlining the characteristics of the growth, the ministry said a recovery in industrial production took effect in the second half of 2003 and continued upward through 2006. Similarly, private consumption began its rebound by advancing "briskly" towards the end of 2003 caused by a rebound in the economy, the increase in real wages, reduction in taxes, the increase in the value of the public's asset portfolio and the decline in the real interest rate. In 2006 it grew 4.2%.
Meanwhile, following a few years of decline, the trend in fixed investments in Israel turned around in 2005 as investments in fixed assets grew 2.9% for that year and strengthened a further 5.1% last year.
Foreign investments also showed a dramatic turnaround in the last few years after being severely affected after the hi-tech bubble burst, with the report indicating a fall from $12.3 billion in 2000 to $3.2b. two years later only to rise to $11.6b. in 2005 and an estimated $16b. last year.
On a negative note, however, housing starts continued to decline in 2006, despite having started the year off on a strong note.
The ministry gave some of its key, and most up to date figures, behind the trends reporting that Israel still ranks first in its investments in research and development, placing 4.7% of gross domestic product into R&D in 2005. The average for OECD countries in 2003 (the latest figures available) was 2% when Israel's level was 4.5%, well ahead of its nearest competitor Sweden which invested 3.7% in R&D that year.
The research further showed that 82% of Israelis aged 25 to 64 had at least upper secondary education by 2003, compared to the OECD average of 66%.