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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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