OECD Economic Surveys: Israel

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2225-1847 (online)
2225-1839 (print)
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OECD's periodic reviews of Israel's economy.  Each survey examines recent economic developments, policy, and prospects, and presents a series of recommendations.
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OECD Economic Surveys: Israel 2013

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08 Dec 2013
9789264183193 (PDF) ;9789264183186(print)

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OECD's 2013 Economic Survey of Israel examines recent economic developments, prospects and policies. Special chapters cover health care and the tax and transfer system.

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  • Basic statistics of Israel , 2012

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Israel were reviewed by the Committee on 6 November 2013. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 20 November 2013.The Secretariat’s draft report was prepared for the Committee by Philip Hemmings under the supervision of Peter Jarrett. Research assistance was provided by Françoise Correia.The previous Survey of Israel was issued in December 2011.

  • Executive summary

    Israel’s output growth remains relatively strong, unemployment is at historically low levels, its high-tech sector continues to attract international admiration, and new off-shore gas fields have come on stream. However, average living standards remain well below those of top‑ranking OECD countries, the rate of relative poverty is the highest in the OECD area, and there are ongoing environmental challenges. Making progress on these fronts will require maintaining prudent macroeconomic frameworks, stronger momentum in structural reforms, particularly in education, social and competition policy, and ensuring environmental externalities are more fully incorporated into government, household and business decisions.

  • Assessment and recommendations

    Israel’s output growth has been impressive, considering global economic weakness, and the output gap is close to zero in contrast to much of the OECD area. The unemployment rate is at a 30-year low, and labour force participation has been rising steadily. Furthermore, new natural gas fields have provided an additional boost to GDP in recent quarters. Substantial public spending cuts and revenue-raising measures legislated in the latest government budget are set to bring fiscal balances back on target for this year and next. However, staying on track with consolidation beyond this will remain challenging. In the monetary domain foreign-currency purchases have resumed, and macro-prudential measures have been needed to contain potential financial risks associated with the surging housing market.

  • How to improve taxes and transfers

    Ensuring tax and transfer systems bring sufficient revenue to reach macroeconomic fiscal targets, address societal goals in re-distribution and social welfare, recognise the influence taxation has on businesses’ competitiveness and adequately address environmental externalities is a tough challenge, arguably more so in Israel than in many other OECD countries. High interest payments and large defence spending make deficit and debt reduction more difficult, socio-economic divides remain wide and as a small-open economy Israel is highly exposed to mobile international capital and competition over international investment. And, as elsewhere, the incorporation of environmental issues into the tax system remains only partial. This review examines ways forward for policy on several fronts: indirect taxation; household income tax and social benefits; taxes on property and wealth; business taxation; and evasion, avoidance and administration issues.

  • How to improve Israel's health‑care system

    Israelis enjoy higher life expectancy and have a much younger demographic profile than most OECD countries. However, the demand for health care is expanding rapidly due to population growth and ageing. Also, the country’s wide socio‑economic divides are reflected in differences in health outcomes. To date the health-care system, centred on four health funds, is widely acknowledged as providing a basket of universal services, with good quality primary and secondary care, while also accommodating demand for private health care. However, there are challenges and tensions in the system. Currently the authorities are having to rapidly expand the number of places in medical schools and nurse training because large cohorts of health-care professionals are heading for retirement. More broadly, there are concerns that the core notion of a universal basket of services is being eroded by co-payments and the increasing demand for the additional services and options provided by private insurance. Although the quality of care is generally good, in hospital care there is room to improve data and concern that overcrowding may become chronic.

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