Israel Business Forecast Q1 2007

Content

• Executive Summary
  • Focus On 2007
• Chapter 1: Political Outlook
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Political Outlook
  • Syria-Israel Reconciliation? Not Holding Our Breath
  • While we mooted the possibility of a rapprochement between Syria and Israel in our last Business Forecast
  • Report, we do not believe it is on the cards just yet
  • Table: Selected Cabinet List
  • Domestic Politics
  • Elections In 2007 Could Bring Back Bibi
  • We see a Likud victory over the next two years as more than plausible, given high levels of public discontent
  • with Prime Minister Ehud Olmert
• Chapter 2: Economic Outlook
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Economic Activity
  • Growth To Stay Robust, Despite War, US Slowdown
  • Table: Economic Activity
  • Fiscal Policy
  • Revised Forecasts, Smaller Deficit Ahead
  • We remain sanguine about the official budget outlook, believing that the deficit will narrow gradually from
  • 2% of GDP to 05% of GDP over the forecast period However, we note that extra-budgetary spending on
  • 'non-recurrent' events such as the Gaza withdrawal or the war with Hizbollah could threaten the government's
  • capacity to service its debt
  • Table: Fiscal Indicators
  • Monetary Policy
  • Easing To Resume In H207
  • Strong growth figures underscore that there is little need to cut rates again, and the Bank of Israel will want
  • to avoid allowing the differential with the US to widen too far, suggesting a pause in the easing cycle for now
  • However, it should resume at some point in 2007
  • Debt Policy
  • Debt Targets Too Ambitious?
  • Although we believe a narrowing fiscal deficit will allow the government to reduce external debt gradually
  • from 246% of GDP to 226% of GDP over the forecast period, we are less confident about the finance minister's
  • aim to bring total debt down to 80% of GDP
  • Table: Monetary and Exchange Rate Indicators
  • Table: Debt Indicators
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • Table: BMI Sovereign RIsk Ratings
  • Middle East and Africa
  • Table: Middle East & Africa Sovereign Ratings - Evolution of Willingness to Pay
  • Table: Middle East & Africa Sovereign Ratings - Evolution of Ability to Pay
• Chapter 4: Business Environment
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Legal Framework
  • Labour Force
  • Foreign Investment Policy
  • Table: Middle East & Africa, AnnualFDI Inflows
  • Table: Israel, Annual FDI Inflows
  • Foreign Trade Regime
  • Table: Top Export Destinations, US$mn
  • Tax Regime
• Chapter 5: Key Sectors
  • Pharmaceuticals & Healthcare
  • Market Summary
  • Israel represents the most advanced pharmaceuticals sector in the Middle East At US$179, annual per
  • capita pharmaceutical spending is the highest in the region Growth in generics is likely to outstrip the
  • prescription market, and the sector is expected to account for about 186% of the market by 2010 The
  • over the counter (OTC) sector will also continue to develop, mainly due to gradual deregulation, rapidly
  • reaching US$324mn by 2010
  • Table: Drug Market Trends 2005-2010
  • Table: Prescription Market Forecasts By Therapeutic Segment