Israeli business will be contending with the fallout of the coronavirus pandemic through next year, which will see as many as 60,000 businesses shut down, a new report by Dun & Bradstreet shows.
According to a survey conducted by the firm, in 2021 the number of active businesses will shrink by some 15,000 to 20,000: some 40,000-45,000 new businesses are expected to open while 55,000 to 60,000 will close their doors.
The bleak prediction follows expectations of a net closure of some 35,000 to 45,000 active businesses this year, the survey showed, with 75,000-80,000 businesses shutting down as 35,000- 40,000 new businesses open.
The number of closures in 2020 represents a 70% jump compared to the number of closures in 2019, the report said, with the restaurant, construction and transportation industries among the worst hit, along with fashion stores.
In 2019, 45,000 businesses closed and 56,000 opened, the data showed.
“The corona crisis is expected to continue to accompany us at least into the first months of 2021,” the authors of the report said. They assumed that in the second half of 2021 there will be more control over the spread of the virus, with a drop in infection rates, improved care, and the economy learning how to keep going.
But if the virus is not better controlled in the second half of next year, “then our estimates will be more pessimistic,” the authors wrote, with the numbers becoming similar to those of 2020.
Israel’s high-tech industry is one bright spot in the bleakness: tech export — R&D, software and IT services — rose 16% in January-May 2020. The tech industry is one of the sectors that received the least assistance from the government, the authors of the report wrote. Just 23% of tech businesses got government assistance, compared with an average of 48% for the rest of the economy.
In 2019, Israel’s economy grew by 3.4% and unemployment was at a record low of 3.7%. The budget deficit was 3.9% of GDP, though higher than the government target of 2.9% of GDP. That year, small businesses accounted for 36% of the nation’s GDP, large businesses contributed 46%, and medium businesses 18%, the report showed.
The nation’s debt to GDP ratio in 2020 is expected to reach some 77%-80%, compared to 115%-120% for other OECD countries.
In September, the OECD forecast that Israel’s economy is expected to contract 6 percent this year.