Summary:

  •  The current-account surplus amounted to $1.6 billion in 2008, compared with $4.5 billion in 2007.  
  • The development of the current account changed sharply during the year. In the first three quarters imports and exports continued to expand, but there was a turnaround in 2008:IV, as the real economic crisis worsened globally: exports and imports fell by about 10 percent (in dollar terms) from their average in the first three quarters of the year.  
  • The global economic crisis was exacerbated in 2008:IV and led to a $1.2 billion fall in exports (excluding seasonal goods, aircraft, and diamonds); on the other hand, there was a $1 billion decline in expenditure on imported fuel (compared with the average in the first three quarters of the year).  
  • There was marked nominal and real local-currency appreciation in 2008 (relative to Israel's trading partners), despite the moderation of economic activity in Israel. This reason for this exceptional development, involving the strengthening of the NIS alongside the moderation of economic activity, was that the global economic crisis affected Israel's economy to a lesser extent than it did other countries, giving rise to heightened net capital inflow in the first three quarters of the year.  
  • Against the backdrop of the global economic crisis, (gross) capital flows in the trading portfolios abroad of residents and in Israel of nonresidents diminished appreciably this year—in contrast with the long-term trends. Direct capital flows into and out of Israel have not yet been affected by the crisis, however.  
  • This year the Bank of Israel greatly increased its foreign reserves, and this improved the economy's resilience at the time of the global economic crisis. An international comparison of reserves in 2007 shows that their level in Israel is not exceptional relative to countries with a similar risk level.  


The Balance of Payments - Full File