RISKS AND VULNERABILITIES:

ISRAEL
Euromonitor International
September 2015

RISKS AND VULNERABILITIES: ISRAEL

LIST OF CONTENTS AND TABLES

Chart 1
Chart 2

SWOT Analysis: Israel ................................................................................. 1

An Overview of Economy, Finance and Trade in Israel: 2014 ...................... 1

Major Components of the Economy ............................................................................................. 2

Economic Growth Expected To Accelerate in the Short Term .................................................. 2
Chart 3
Chart 4

Annual Real GDP growth in Israel vs the Middle East and Africa:
2009-2016 .................................................................................................... 2
Gross Value Added by Sector in Israel: 2014 ............................................... 3

Socio-political Risk ....................................................................................................................... 4

Political Instability Continues To Undermine the Countrys Business Environment .................. 4
Chart 5

Total Unemployment Rate vs. Youth Unemployment Rate in Israel:

2009-2014 .................................................................................................... 5

External Sector ............................................................................................................................. 6

Strong Services Exports Support the Countrys Current Account Surplus ................................ 6
Chart 6
Chart 7
Chart 8

Israels Top 10 Export Destinations: 2014 .................................................... 6

Israels Imports by Commodity: 2014 ........................................................... 7
Israels External Balance: 2009-2014 ........................................................... 7

Government Finance .................................................................................................................... 8

Lack of Disciplined Fiscal Policy Has Led To Continued Bugdet Deficits ................................. 8
Chart 9

Public Debt vs. General Government Budget Deficit in Israel: 20092014 ............................................................................................................. 9

Financial Stability ......................................................................................................................... 9

Inflationary Pressures Eased in 2014 ..................................................................................... 10
Chart 10
Chart 11

Israels Bank Nonperforming Loans to Total Gross Loans: 2009-2014 ...... 10

Inflation and Long-Term Interest Rate in Israel: 2009-2014 ....................... 11

Real Estate ................................................................................................................................. 11

Surging House Prices Are A Source of Risk ........................................................................... 11
Chart 12
Chart 13

Gross Fixed Capital Formation in Israel: 2009-2014 .................................. 11

Housing Completions and House Price Index in Israel: 2009-2014 ........... 12

Energy and Environment ............................................................................................................ 13

Dependence on Energy Imports Is Expected To Ease in the Long Run ................................. 13
Chart 14
Chart 15

Israels Primary Energy Consumption: 2014 .............................................. 13

Total and Per Capita CO2 Emissions in Israel: 20092014 ....................... 14

Definitions................................................................................................................................... 15

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RISKS AND VULNERABILITIES:

ISRAEL
Real GDP growth of Israels economy decelerated to a six-year low in 2014, reflecting the
impact of slowing global demand, as well as political instability in the country. The lack of a
disciplined fiscal policy has continued to weigh on the health of public finances, although the
countrys financial system is stable and its dependence on energy imports is expected to decline
in the long run. However, soaring real estate prices represent a risk to the countrys financial
and social stability.
Chart 1

Source:

Chart 2

SWOT Analysis: Israel

Euromonitor International

An Overview of Economy, Finance and Trade in Israel: 2014

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Source:
Note:

Euromonitor International from national statistics/IMF/UN

Data for 2015 to 2030 are forecasts.

MAJOR COMPONENTS OF THE ECONOMY

Economic Growth Expected To Accelerate in the Short Term
The size of the Israeli economy reached ILS1.1 trillion (US$304 billion) in 2014, after growing
by 2.8% on an annual basis in real terms. This was the slowest rate of expansion in six years,
reflecting the impact of slowing global demand on Israeli exports, as well as lower foreign direct
investment (FDI) inflows caused by uncertainty arising from the Israel Gaza conflict of 2014:
Annual growth of Israels economy in real terms is expected to reach 2.6% in 2015 and then
pick up to 3.5% in 2016, on the back of an expected increase in capital inflows (as uncertainty
over the 2014 armed conflict with Gaza fades out and FDI inflows receive a boost from the
Israeli governments planned privatisation programme);
Nevertheless, these forecasts are subject to downside risks in case of a potential increase in
political instability in Israel or in the broader Middle East region; delays in the governments
privatisation programme; or a further deceleration of global demand.
Chart 3

Annual Real GDP growth in Israel vs the Middle East and Africa: 2009-2016

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Source:
Note:

Euromonitor International from national statistics/OECD/UN/International Monetary Fund (IMF)/World

Economic Outlook (WEO)
Data for 2015 and 2016 are forecasts.

In 2014, the largest component of the Israeli economy was Financial Intermediation, Real
Estate, Renting and Business Activities, which represented 36.3% of total Gross Value
Added (GVA), reflecting Israels developed business sector, as well as a booming property
sector that has fuelled a real estate bubble in the country. The second biggest industry was
Education, Health, Social Work and Other Community, Social, Personal Service Activities,
which accounted for 16.9% of total GVA in 2014, mainly as a result of relatively high levels of
education spending (as a percentage of total GDP) by the Israeli government;
The Electricity, Gas and Water Supply sector was the fastest growing of the Israeli economy
over 2009-2014, increasing at an average annual rate of 10.2% in real terms over this period
(which took its contribution to total GVA from 1.6% to 2.2%). This was due to large levels of
public and private investment on (mainly natural gas-based) electricity generation in the
country over this period, boosted by the discovery (in 2009) and start of production (in 2013)
of large offshore natural gas reserves in the Tamar gas field. The latter also supported a
sharp rise in activity in the countrys Mining and Quarrying sector, which grew on average by
7.2% per year in real terms between 2009 and 2014 (the second fastest-growing sector in the
economy over this period), causing its contribution to total GVA to rise from 0.5% in 2009 to
0.6% in 2014.
Short-term growth prospects of the Israeli economy are of a slight acceleration in real GDP
growth from 2016 onwards, although subject to the aforementioned downside risks related to
both domestic and external factors that could weigh on the countrys economic expansion.
Chart 4

Gross Value Added by Sector in Israel: 2014

% of total GVA

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Source:
Notes:

Euromonitor International from national statistics

Wholesale & Retail Trade includes Repair of Motor Vehicles, Motorcycles and Personal and Household
Goods.
Financial Intermediation includes Real Estate, Renting and Business Activities.
Public Administration includes Defence and Compulsory Social Security.
Education, Health & Social Work includes Other Community, Social & Personal Service Activities.

SOCIO-POLITICAL RISK
Political Instability Continues To Undermine the Countrys Business
Environment
Political violence (both at domestic and regional level) continues to dampen investment into
the country:
The armed conflict between Israel and Gaza that occurred in July and August 2014 led to
heightened political uncertainty in the country, with tensions between far-right Israeli extremist
groups and Palestinian Islamic groups continuing into 2015. Political instability has also risen,
due to the outcome of the countrys early legislative election of March 2015 (following the
collapse of the previous coalition government), which resulted in the right-wing Likud party
(led by Prime Minister Benjamin Netanyahu) winning a third consecutive term in power,
although leading a fragile five-party coalition. In addition, political violence in the broader
Middle East region (in countries like Syria, Iraq and Egypt) has also an adverse impact on
capital inflows into Israel. In the World Banks Political stability and absence of violence
index, Israel ranked 171st out of 203 economies in 2013 (latest data available);
Israeli law provides for freedom of speech, press and association, and these rights are
generally respected by the government. Nevertheless, some groups including women, the
Arab citizens of Israel and (mainly illegal) immigrants continue to suffer from societal
discrimination, limiting their voice and participation in government decisions. In the World
Banks Voice and accountability index, Israel held the 66th position out of 203 economies in
2013 (latest data available);
Corruption levels in the country are perceived as relatively low, although public sector
procedures are still susceptible to influence by individuals with personal contacts, providing an
unfair advantage when navigating the countrys high levels of red tape. In Transparency

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Internationals Corruption Perceptions Index, Israel ranked joint 37th (together with Spain) out
of 175 countries in 2014.
Israel has a relatively flexible labour market, although redundancy costs remain elevated:
The unemployment rate in Israel declined from 9.5% in 2009 to 5.9% in 2014, on the back of
job gains in the countrys public sector over this period. However, the unemployment rate for
the youth remained markedly higher than the overall unemployment rate during this period,
reaching 14.4% in 2014 (compared to 18.6% in 2009), reflecting employers preference for
experienced personnel.
Chart 5

Source:
Note:

Total Unemployment Rate vs. Youth Unemployment Rate in Israel: 2009-2014

Euromonitor International from International Labour Organisation (ILO)/national statistics

Youth unemployment rate refers to the unemployed population aged 15-24 as a percentage of
economically active population aged 15-24.

Israels has the highest fertility rates amongst OECD countries (at 3.0 children born per
female in 2014, compared to the OECD average of 1.8), which will help easing the ageing
process of the countrys population:
Although the proportion of population aged 65+ out of the total population in Israel is forecast
to rise from 10.8% in 2014 to 13.9% in 2030, it will remain significantly below the 21.6%
average for OECD economies expected by 2030. Likewise, while Israels old-age dependency
ratio is forecast to increase from 17.6% in 2014 to 22.8% in 2030, it will still be one of the
lowest amongst OECD countries by 2030;
The return of the Jewish diaspora to Israel continues to generate positive net migration rates
for the country, which stood at 2.5 per 1,000 population in 2014, and are forecast to reach 2.0
per 1,000 population in 2020. Nevertheless, in recent years, the country has also started to
experience an outflow of highly qualified individuals (emigrating typically to the USA or the
European Union) seeking to improve their economic and/or professional opportunities, which
is generating some problems of brain drain for the country.

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EXTERNAL SECTOR
Strong Services Exports Support the Countrys Current Account Surplus
Israel has a relatively open economy, with total exports of goods representing 19.0% of total
GDP in 2014. However, due to large imports of energy products and capital goods, the county
has recorded long-term trade deficits that reached 4.5% of total GDP in 2014 (compared to
2.4% of total GDP in 2009):
Basic Manufactures (mainly processed precious stones including diamonds, emeralds and
rubies) is the countrys largest exports category, accounting for 33.1% of total Israeli exports
of goods in 2014. This was followed by Chemicals (principally pharmaceutical products and
fertilisers) and Machinery and Transport Equipment (including electrical appliances; industrial
machinery and telecommunications equipment), which accounted for 27.6% and 23.9% of the
countrys total goods exports respectively in the same year;
The European region is Israels largest exports market, receiving 35.7% of the countrys total
exports of goods in 2014, followed by North America (27.8%) and Asia Pacific (24.2%). The
USA remains as Israels single biggest exports destination, accounting for 26.9% of the
countrys total goods exports in the same year;
The high-value added nature of Israels exports, as well as the relative diversification amongst
exports regions, helps the country shield its external sector from the impact of swings of
global commodity prices or demand shocks to specific regions. Nevertheless, this did not
prevent the Israeli exports sector from being hit by the impact of the 2008-2009 global
financial crisis or slowing demand in the global economy during 2014, due to the global nature
of these developments.
Chart 6

Source:

Israels Top 10 Export Destinations: 2014

Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics

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Israel is dependent on imports of energy, inputs for its manufacturing sector, and capital
goods not produced in the country. In 2014, total goods imports into Israel reached 23.5% of
total GDP, compared to 22.7% of total GDP in 2009:
The largest import category in the country is Machinery and Transport Equipment (including
electrical machinery, road vehicles and industrial equipment), which accounted for 28.1% of
total goods imports in 2014, followed by Basic Manufactures (mainly raw precious stones to
be processed within the country), which represented 22.0% of total goods imports;
The USA is also the single largest source of imports into Israel, accounting for 11.8% of the
countrys total imports of goods in 2014, followed by China (whose share of Israels total
goods imports rose to 8.3% in 2014 from 1.6% in 2000). In terms of regions, Europe was
Israels biggest source of imports, representing 46.1% of the total in 2014.
Chart 7

Israels Imports by Commodity: 2014

% of total goods imports

Source:

Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics

Despite the countrys negative balance in the international trade of goods, Israel has large
exports of services (including programming and computer services; research and development
and tourism services), which results in a positive current account surplus:
In 2014, the countrys current account surplus as a percentage of total GDP reached 4.8%,
compared to 4.0% in 2009;
Israels foreign exchange reserves rose sharply from US$57.5 billion in 2009 (equivalent to
27.9% of total GDP in that year) to US$83.9 billion (27.6% of total GDP) in 2014, on the back
of a central bank intervention programme (started in 2008) aimed at boosting the countrys
foreign exchange reserves, as well as limiting the appreciation of the Israeli shekel. In terms
of months of imports, Israels foreign exchange reserves reached the equivalent of 14.1
months of imports in 2014, providing the country with some cushion in case of external
shocks.
Chart 8

Israels External Balance: 2009-2014

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Source:

Euromonitor International from national statistics/OECD/International Monetary Fund (IMF)/International

Financial Statistics (IFS)/World Economic Outlook (WEO)

Israel has generally open policies towards trade and foreign investment, while also provides
an attractive set of incentives to FDI:
As a result, FDI intensity into Israel averaged 2.9% of total GDP over the period of 2009-2014,
higher than the Middle East and Africa average of 2.4% over the same period. Nevertheless,
in 2014 alone, FDI intensity into Israel fell to a 12-year low of 2.1% of total GDP, as a result of
uncertainty caused by the conflict between Israel and Gaza in that year;
After plunging by 55.1% year-on-year (y-o-y) in real terms to reach ILS18.1 billion (US$4.6
billion) in 2009, owing to the impact of the 2008-2009 global financial crisis, FDI inflows into
Israel recovered to reach ILS42.6 billion (US$11.8 billion) in 2013, although they fell again
sharply by 46.3% y-o-y in real terms in 2014 (to ILS23.0 billion, or US$6.4 billion) owing to
uncertainty caused by the conflict with Gaza.
The country uses a floating exchange rate system for the Israeli shekel, performing
interventions in the foreign exchange markets in order to influence the currency exchange rate:
Between 2009 and 2014, the shekel strengthened by 7.7% (despite the central banks
intervention to limit the appreciation of the currency) to reach ILS3.6 per US$ in 2014, due to
strong capital inflows (of direct and/or portfolio investment) into the Israeli economy during
that period and the start of production of natural gas in the Tamar gas field in 2013 (which
helped improve the countrys external trade balance).

GOVERNMENT FINANCE
Lack of Disciplined Fiscal Policy Has Led To Continued Bugdet Deficits
Although Israel has in place a target for budget expenditure and debt levels, in practice these
limits are not observed by the Israeli government. This has resulted in the country posting
continued general government budget deficits since 2008 that reached 2.4% of total GDP in
2014, compared to 4.2% of total GDP in 2009:
Total government revenue rose by 23.1% in real terms between 2009 and 2014 to reach
ILS287 billion (US$80.3 billion) in 2014. Tax collection as a percentage of total GDP

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increased slightly from 17.7% in 2009 to 18.1% in 2014, although it remains one of the lowest
amongst OECD economies, owing to Israels numerous tax incentives to attract foreign
investment into the country;
Israels total government expenditure as a percentage of total GDP fell slightly from 30.3% in
2009 to 28.8% in 2014, as a result of slowing spending on general public services and
defence, which more than offset higher social spending during this period;
While the countrys continued general government budget deficits between 2009 and 2014
fuelled public debt levels in absolute terms (which registered a rise from ILS609 billion
(US$155 billion) to ILS748 billion (US$209 billion) during this period), Israels public debt as a
proportion of total GDP fell from 75.0% in 2009 to 68.7% in 2014, as the countrys total GDP
expanded faster than public debt levels over this period. As of September 2015, the rating for
the countrys long-term sovereign bonds by Standard & Poors was A+ (with stable outlook);
by Moodys it was A+ (with stable outlook); and by Fitch it was A (with stable outlook), all
corresponding to investment grade;
In 2014, the Israeli government launched a privatisation programme worth ILS15.0 billion
(US$4.2 billion) set to run for the period of 2015-2017, which would help ease the countrys
general government budget deficit in the short term. Nevertheless, the lack of a disciplined
fiscal policy will remain a risk to Israels public finances in the long term, despite the countrys
strong economic growth masking the countrys persistent general government budget deficits
and rising amounts of public debt.
Chart 9

Source:

Public Debt vs. General Government Budget Deficit in Israel: 2009-2014

Euromonitor International from National Statistics Offices/International Monetary Fund/OECD

FINANCIAL STABILITY

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Inflationary Pressures Eased in 2014

The Israeli financial system is well developed with depth, as total bank claims on the private
sector reached 90.4% of total GDP in 2014, higher than the OECD average of 80.4% of total
GDP:
The countrys banking system withstood satisfactorily the impact of the 2008-2009 global
financial crisis, and as of 2015 it displays adequate levels of capitalisation and liquidity. Total
bank claims on the private sector as a percentage of total GDP grew from 88.3% in 2009 to
90.4% in 2014, while credit delinquency rates remained relatively low, with nonperforming
loans equating to 2.6% of total gross loans in 2014 (although up from 1.4% in 2009);
The biggest risk facing the Israeli financial system lies in the high exposure to the countrys
booming real estate sector, with credit to the this sector accounting for 44.0% of total bank
credit issued as of 2014, leaving Israeli banks highly vulnerable to property price corrections.
Shocks to the overall Israeli economy, as well a high concentration of lending to relatively few
individuals/corporations, are other sources of risk to the countrys banking system.
Chart 10

Source:

Israels Bank Nonperforming Loans to Total Gross Loans: 2009-2014

Euromonitor International from World Bank

The main objectives of the Bank of Israel (the countrys central bank) are to maintain price
stability; to support the objectives of the governments economic policy (including economic
growth, employment and reduction of social inequality); and to back the stability of the financial
system:
The central bank uses an inflation-targeting regime, maintaining since 2003 a target band of
1.0-3.0%. Despite the Bank of Israels accommodative monetary policy implemented since
2011, the countrys annual inflation rate fell to a seven-year low of 0.5% in 2014 from 1.5% in
2013, owing to the countrys economic deceleration and lower global commodity prices since
the second half of 2014;
Between 2009 and 2014, total money supply in the Israeli economy surged by 71.4% in real
terms to reach ILS206 billion (US$57.7 billion) in 2014, while the countrys annual lending
rates decreased from 4.2% to 3.9% over the same period, reflecting the central banks
accommodative monetary policy since 2011;

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Israels long-term interest rate, a proxy for risk aversion, also declined from 5.1% in 2009 to
2.9% in 2014, on the back of strong capital inflows into the Israeli economy during that period.
Chart 11

Source:

Inflation and Long-Term Interest Rate in Israel: 2009-2014

Euromonitor International from national statistics/OECD/UN/IMF

REAL ESTATE
Surging House Prices Are A Source of Risk
The Israeli construction sector was highly dynamic during the period of 2009-2014, as a result
of the governments expansionary fiscal and monetary policies; high demand for housing; and
robust capital inflows into the Israeli economy:
As a consequence, the construction sector expanded at an average annual rate of 6.6% in
real terms between 2009 and 2014 (which caused its contribution to total GVA to rise from
5.0% to 5.8% during this period);
Likewise, total gross fixed capital formation recorded robust growth of 25.1% in real terms
over the same period.
Chart 12

Gross Fixed Capital Formation in Israel: 2009-2014

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Source:
Note:

Euromonitor International from national statistics/OECD/UN/International Monetary Fund

(IMF)/International Financial Statistics (IFS)
Gross fixed capital formation is measured in constant 2014 prices, fixed exchange rates.

Strong housing demand, coupled with insufficient supply has fuelled a fast rise in property
prices in the country:
Over the period of 2009-2014, the countrys house price index soared by 55.7% in nominal
terms. While the rise has been mainly the consequence of undersupply in the countrys
housing market, there is also an element of speculative activity in property acquisitions, which
has generated a real estate bubble in the country;
Despite surging house prices, Israels house-price-income ratio reached 27.5x in 2014
(according to Global Property Guide). This level is moderate by regional standards, mainly
due to Israels extremely high levels of per capita disposable income compared to most other
economies in the Middle East and Africa region;
The countrys real estate bubble poses significant risks to Israels financial stability (given the
large share of credit concentrated in the construction and property sector), while it is also a
source of social tensions, as exemplified by widespread protests that occurred during 2011,
driven in part by discontent over rapidly-rising housing costs in the country.
Chart 13

Housing Completions and House Price Index in Israel: 2009-2014

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Source:

Euromonitor International from national statistics

ENERGY AND ENVIRONMENT

Dependence on Energy Imports Is Expected To Ease in the Long Run
The discovery of significant natural gas reserves in the 2000s has considerably changed the
landscape of Israels energy sector, with growing domestic production of natural gas expected to
reduce the countrys dependence on energy imports over the long term:
Crude oil (imported mainly from Russia and Azerbaijan) remains as the countrys most
important energy source, accounting for 42.1% of total primary energy consumption in 2014,
followed by coal (28.8%) and natural gas (whose share out of Israels energy mix rose from
15.8% in 2009 to 28.3% in 2014);
In 2014, total energy imports into the country amounted to US$14.7 billion, equivalent to 4.8%
of total GDP; this proportion is expected to narrow in the long term, as the country develops
its sizeable reserves of natural gas (which would allow it also to export its natural gas
surpluses, contributing to further narrowing net energy imports). In the meantime, Israels
strong dependence on energy imports will continue generating important risks deriving from
increases in global energy prices, as well as potential disruption of supplies;
In Resolution No. 4450 issued in January 2009, Israel set a target of 10.0% of use of
renewable energy sources out of total electricity generation by 2020. Nevertheless, as of
2014, this share was only 1.5%, reflecting the focus on the expansion of the countrys natural
gas sector (through natural gas-fired power plants) over this period.
Chart 14

Israels Primary Energy Consumption: 2014

% of Total Primary Energy Consumption

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Source:

Euromonitor International from BP Statistical Review of World Energy

CO2 emissions per unit of output in Israel reached 272 grams per US$ in 2014 (down from
324 grams per US$ in 2009). These levels were lower than the Middle East and Africa average
of 649 grams per US$ in 2014, reflecting the high-value added nature of Israeli exports, as well
as the countrys large exports of services:
During the period of 2009-2014, Israels energy efficiency (measured as US$ per tonne of
energy consumed) rose from US$9,180 to US$12,651 (ranking amongst the highest in the
region);
Israel was not assigned an emissions reduction target under the terms of the Kyoto Protocol
or the 2012 Doha extension, although in 2010 the country unilaterally committed to cut its
greenhouse gas emissions levels by at least 20.0% compared to business as usual levels by
2020;
In addition, the Israeli government is taking measures to mitigate the effects of climate
change, which could have a potentially large negative impact on areas including water
availability, energy and agriculture.
Chart 15

Total and Per Capita CO2 Emissions in Israel: 20092014

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Source:
Note:

Energy Information Administration of the US Government, International Energy Annual

CO2 emissions encompass the consumption and flaring of fossil fuels.

Israel is exposed to natural disasters including droughts, floods and extreme temperatures,
which could have disruptive effects on business and consumer activity:
According to EM-DAT, natural disasters in the country affected 2.0 million persons and
caused economic losses worth US$270 million (equivalent to 0.1% of 2014 total GDP) over
the period of 2009-2014.

DEFINITIONS
Corruption Perceptions Index relates to perceptions of the degree of corruption as seen by
business people and country analysts.
Energy Efficiency indicates the value of gross domestic product produced per tonne of oil
equivalent of energy consumed.
Foreign Direct Investment (FDI) is investment made to acquire a lasting interest in or effective
control over an enterprise operating outside of the economy of the investor.
FDI Inflows are the net value of inward direct investment made by non-resident investors in
the reporting economy, including reinvested earnings and intra-company loans, net of
repatriation of capital and repayment of loans.
FDI intensity measures FDI inflows as percentage of total gross domestic product (GDP).
Gross Fixed Capital Formation (GFCF) equals acquisition less disposals of fixed assets,
improvement of land, change in inventories and acquisitions less disposals of valuables.
Gross Value Added (GVA) is the value of output less the value of intermediate consumption. It
is calculated without making deductions for depreciation of fabricated assets or for depletion and
degradation of natural resources.
House-Price-Income Ratio is the ratio of the cost of a typical upscale housing unit of 100
square metres compared to the countrys GDP per capita.
Net Migration is the difference between the number of immigrants into and emigrants from the
area during the year.
Old-Age Dependency Ratio is the percentage of the population aged 65+ (retired) per
population aged 15-64 (of working age).

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Openness of the Economy is reflected by exports as a percentage of total GDP. More than
50.0% is very open; 25.0%-49.0% is open; 6.0%-24.0% is relatively open; and 0.0%-5.0% is
relatively closed, high barriers to trade.
Political Stability and Absence of Violence Index reflects a better score in a higher position
and measures the perceptions of the likelihood that the government will be destabilised or
overthrown by unconstitutional or violent means (including domestic violence and terrorism).
Public Debt is total gross debt owed by any level of government (central government, local
government, social security funds). Debt is reported at values outstanding at the end of the year
and is consolidated between and within the sectors of general government - a loan from one
level of government to another represents both an asset and an equal liability for the
government as a whole and so it cancels out (is "consolidated) for the general government
sector.
Unemployment Rate represents unemployed population as a percentage of the economically
active population, also known as the labour force (the total number of people employed plus
unemployed).
Voice and Accountability Index captures perceptions of the extent to which a country's
citizens are able to participate in selecting their government, as well as freedom of expression,
freedom of association, and a free media. A high ranking reflects a high score in the index.
Youth Unemployment Rate refers to the unemployed population aged 15-24 as a percentage
of economically active population aged 15-24.

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