Published On: Wed, Apr 16th, 2014

The View From Jerusalem : Current Account Data For 2013

Pinchas-LandauBottom line: The current account for 2013 posted a surplus of $7.2bn, far more than in 2012 or 2011 ($0.8bn and $3.3bn respectively) and equivalent to 2.5% of GDP. Given the arrival of offshore energy (from March 2013), this suggests that large current account surpluses will henceforth be the norm for the Israeli economy.


  • The deficit originally recorded for Q3 (of $363m) was revised into a surplus of $1.8bn. This reflects the strong recovery of goods exports, which began in August 2013 and continued through the end of last year.
  • The full-year surplus was driven by continued rapid growth in exports of services, especially software and start-ups (see graph). The overall surplus on trade in services rose from $9.8bn in 2012 to $12.8bn in 2013.
  • The deficit on primary incomes (income from labour of foreigners in Israel and of Israelis abroad; and income on financial investments of foreigners in Israel and of Israelis abroad) shrank from $8bn in 2012 to $5.5bn in 2013.
  • The large current account surplus spurred export of capital. Israeli purchases of foreign securities, mainly by institutional investors,  totaled $11bn, compared to only a net $1.6bn in portfolio investment in Israeli securities by foreigners.
  • However, in FDI (foreign direct investment), inflows of $11.8bn were more than double Israeli direct investments abroad ($4.9bn). The Bank of Israel’s policy of intervening in the foreign exchange markets led to an increase of $4.4bn in the country’s foreign exchange reserves – similar to 2011’s increase of $4.5bn, whereas in 2012 reserves declined marginally, because the central bank made no purchases in the market.
  • The strong outflow caused Israel’s International Investment Position to improve further: total overseas assets exceeded overseas liabilities by $63.6bn at end-2013, and net overseas loans rose by $15.7bn to $86.5bn

Pinchas Landau


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About the Author

- About Pinchas Landau is an economic and financial analyst, serving as a consultant to major financial institutions in Israel and abroad on domestic and global developments. After working in banking and investment, he moved to journalism in 1983 and served as financial correspondent of the Jerusalem Post and then as senior columnist for Globes, Israel’s business daily. He has written for many international newspapers, including the Wall Street Journal and Barrons, as well as numerous professional publications. Since 1996, Pinchas has been writing and publishing The Landau Report, a unique newsletter service which analyses economic, business and financial trends in Israel, as well as tracking Israeli and regional geo-political affairs and has attracted a global subscriber base. He has also been providing quarterly and annual reports on Israel for the Economist Intelligence Unit for 25 years. Landau is also an accomplished speaker, lecturing in English and Hebrew to audiences in Israel and overseas on a range of issues relating to Israel and the Jewish world. Born in London and educated at the London School of Economics, he and his family have been living in Jerusalem since 1976.

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