(Communicated by the Ministry of Finance, International Affairs Department)

Highlights of the review:

Growth
The Israeli economy continued to enjoy accelerated growth in 2011, estimated to reach 4.8% at the end of the year.
Investments in capital assets (machinery, equipment, infrastructure, and construction) increased by 18.8% in 2011 (based on the first three quarters). Between 2008 and 2011 investments rose a cumulative 35%.

Unemployment
Israel had an average unemployment rate of 5.7% in 2011 (based on the first three quarters), a significantly lower percentage of unemployment than in the United States (9%) and in the euro zone (10.1%).
Participation in the job market rose to 57.4% (average for the first three quarters) from 57.3% in 2010.
According to data of the Central Bureau of Statistics, the unemployment rate in October 2011 stood at 5%.

Taxes
Tax collection in 2011 totaled NIS 211.3 billion compared to a budget forecast of NIS 213.5 billion.

Deficit
The budget deficit in 2011 was estimated at 3.3%.

Debt
In contrast to most developed economies, Israel's debt-to-GDP ratio continued to decline in 2011, coming in at 74% according to first estimates. The government's debt reduction policy has helped to increase fiscal stability and lower government capital-raising costs.

Capital Market
Capital market indices for 2011 in Israel and the world reflected the development of the debt crisis in Europe, along with fiscal difficulties in the United States and other developed countries, as well as investors' growing fears of a renewed global economic slowdown. The debt crisis in Europe was also reflected in the downgrading of the credit rating of a slew of euro zone countries, whereas Israel's rating had risen this past year.

Ministry of Finance forecast for 2012

Israel's growth forecast for 2012 has been revised to 3.2% (from 4%), due to concerns over an economic slowdown in the euro zone as well as slower growth in the volume of international trade which has affected Israeli exports. Projected tax revenues for 2012 have been updated to NIS 221 billion (from NIS 232.3 billion). The budget deficit in 2012 is expected to reach 3.4% (instead of 2.0%).

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