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Daily infections of 45,000 to cost Israel $800m every three weeks, says central bank

Bank of Israel governor says economic hit could come from workers getting sick or stuck in isolation

Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.

Bank of Israel Governor Amir Yaron speaks during a press conference at the Bank of Israel in Jerusalem, on January 7, 2019. (Noam Revkin Fenton/Flash90)
Bank of Israel Governor Amir Yaron speaks during a press conference at the Bank of Israel in Jerusalem, on January 7, 2019. (Noam Revkin Fenton/Flash90)

If Israel reaches 45,000 confirmed COVID-19 infections a day, this could cost the economy about NIS 123 million ($39.18 million) daily and up to NIS 2.5 billion ($800 million) every 20 days, the Bank of Israel estimated Monday.

The highly contagious Omicron coronavirus variant is currently sweeping Israel, driving up infection rates to record highs but with a peak still ahead. Virus czar Professor Salman Zarka said Monday that it is about 3-5 weeks away and warned that a “significant lockdown” would have to be considered.

The Bank of Israel’s Governor Amir Yaron spoke at the Knesset Finance Committee Monday to present the central bank’s estimates on the economy.

“At this point, we are not talking about a macro-economic development,” Yaron said. “Most estimates are of a relatively short wave — a number of weeks — that is why the cost to the economy per confirmed coronavirus case is not of macro-economic proportions,” he said, according to a Reuters translation.

Yaron said the slump would come from possible masses of workers getting sick or stuck in isolation, impacting economic activity and consumption.

The daily cost of isolation to a person was estimated at NIS 273 ($87) a day, according to a central bank presentation to the committee.

Prime Minister Naftali Bennett said that information presented to the cabinet on Sunday showed the likelihood that “a total of 2 to 4 million citizens will be infected during this current wave.”

Yaron told the finance committee that the government should prepare for worst scenarios where certain economic sectors could be severely hit and “could bring about macro-economic damage.”

In previous lockdowns imposed by the last government headed by Benjamin Netanyahu, different forms of aid were granted to hard-hit businesses, a move Finance Minister Avigdor Liberman said he was not hoping to repeat.

In a press briefing Monday, Liberman dismissed the reported suffering of some business owners, particularly restaurateurs, some of whom have reported that their profits have been halved.

“I’ve seen business owners talk about losses,” Liberman said. “I’ve seen the dividends they’ve gained. Any business that is harmed needs to be helped. All businesses are in excellent shape and I am happy for it. All the shops and restaurants were full in Modi’in. As of today, from talks with businesspeople, the problem is manpower shortages.”

Asked about government payouts to businesses similar to those handed out by the Netanyahu government, Liberman said: “I haven’t said that under no circumstances will there be aid to businesses, but there will be no handing out of gifts. There will be no election bribes.”

Yaron reiterated in the briefing to the finance committee Monday that Israel’s economic growth in 2022 was forecast at 5.5% after the current wave of infections subsides and businesses start recovering.

The bank said last week that it was revising its estimates on GDP growth for 2022 from 6.5% to 5.5%, and 5% in 2023.

Economic activity in Israel “continues apace” and unemployment figures are down, but another wave of infections is “leading to an increase in uncertainty regarding the intensity of economic activity in the short and medium term,” the central bank said in a statement last Monday.

Israel had been enjoying a bounce back of the economy in 2021, having weathered the fourth wave of the pandemic over the past summer, quickly tightening some restrictions, launching a booster vaccination campaign, and approving vaccines for kids aged 5-11. In early December, an OECD report said that activity rebounded strongly in 2021 and GDP was projected to grow robustly by 6.3% in 2021.

The OECD forecast that Israel’s GDP would grow 4.9% in 2022 and 4% in 2023.

A Dun & Bradstreet report last month said Israel’s economy grew by 7% in 2021, beating out a global average of 5.9%.

Over the past six weeks, infection rates fueled by Omicron have grown steadily, reaching 21,501 new infections on Sunday, according to Health Ministry figures, more than triple the daily tally from last week.

Health experts believe the overall number of infected Israelis is, in reality, much higher and that many cases are going undetected due to a lack of testing availability. Israel is currently embroiled in a testing hubbub, having authorized at-home antigen test kits to relieve the strain at overcrowded testing centers by restricting PCR testing to only certain at-risk individuals. But people have complained of confusing rules, out-of-pocket expenses for the tests, and inconsistent accuracy.

The switch to home tests has also led to a run on the kits, with drugstores running out and many turning to delivery service Wolt. Bennett is reportedly seeking to bring in 50 million tests within 10 days, enough for every citizen five times over, Channel 12 news reported Monday.

However, ministry officials clarified that, at best, they can obtain 15 million in that time frame. At a meeting Monday to discuss the matter, the Defense Ministry offered to use its resources to obtain the necessary kits, including backchannels and planes flying from various destinations, according to the report.

Zarka also said that the government was also planning to add 40 new testing centers, bringing the total nationwide up to 300.

Times of Israel staff contributed to this report.

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