Israel could be looking at billions in losses to its economy should the current Omicron wave of the Covid virus require continued limitations on commerce and work until the end of the month. This is what Governor of the Bank of Israel (BOI) Amir Yaron told the Knesset.
The news comes as Israelis are frustrated by seemingly never ending lines at Covid testing centers and reports that the country is running out of testing kits. Prime Minister Naftali Bennett has attempted to reassure the public by promising the importation of millions of kits and to bring the cost of such kits down. He also promised to provide millions of testing kits to school children and School staffs.
At the same time Israel has also begun a campaign of providing a fourth Coronavirus vaccination to all people over the age of 60 as well as to medical workers. Several hundred thousand people in the country have already gotten a fourth vaccination.
And in good news for the economy, Israel last week did away with the policy of red states, countries where Israelis may not travel to at all due to a high rate of Covid infection there. People from those countries were also prohibited from entering Israel. Now, Israel is once again open to international tourism.
It was under this backdrop that the BOI Governor addressed the Knesset. Yaron first reviewed the damage that the first wave of the Coronavirus caused the Israeli economy in 2020. It was in March of that year that Israel first shutdown the country, a shutdown that lasted for two months. The country was closed for tourism, a significant part of its economy, for the remainder of the year and suffered another domestic closure in the fall.
Israel’s economy contracted by We contracted 2.5 percent in 2020 because of this, something that Governor Yaron called, “a painful but small contraction on a global scale.” But saying that Israel is making a “very good leap back,” he gave a rosy forecast of 6.5 percent growth in GDP for 2021, 5.5 percent in 2022 and 5 percent in 2023.
“The forecast already embodies a basic forecast of the omicron wave,” he said. “This is a very big growth process, we have an iron dome of a high-tech industry, so compared to the US and OECD countries, our services exports continue to skyrocket, because this export of the technologies we excel at, has had a very big leap.
“Alongside this, of course, were areas that were affected. We are in a period of unprecedented recruitment of Israeli high-tech companies, and we want to make sure that more and more populations join this locomotive. ”
Thus, Yaron presented that although Israel constitutes only 0.5% of world GDP, more than 8% of the world’s unicorns originate in Israel.
Unfortunately, the Governor also explained how the current Omicron wave is harming Israel’s economy. Noting that the concentration of GDP at its level depends on the further development of the epidemic and measures to deal with it, he presented the Bank’s forecast for the variety:
“We made an estimate at the bank for the economic damage as a result of a day of isolation, we went from industry to industry, we calculated the proportion of workers who cannot work from home, double their net daily wage.”
We doubled the weight gain of the same sector and the participation rate, we added the addition of avoidance of consumption, according to the data we have from credit card issuance – and we reached a daily cost for isolating an employee, of something like 273 NIS. If we go for a scenario of 15 percent positive tests out of 300 thousand per day, it is NIS 123 million, if you take this daily cost and you are talking about a wave of 10 days, we are talking about orders of magnitude in product terms, of a drop over a billion shekels in ten days, or 2 billion plus in 20 days.”