Virus outbreak has cost economy NIS 1 billion, Finance Ministry says

Continued spread of disease in Israel could reduce GDP by NIS 12 billion, or one percent of national output, with most damage caused to tourism and aviation industries

By Luke Tress

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2 March 2020, 11:20 pm

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Luke Tress is The Times of Israel's New York correspondent.

Workers at Sheba-Tel Hashomer Hospital wait for Israelis who were under coronavirus quarantine on the cruise ship Diamond Princess, in Japan, February 20, 2020. (Avshalom Sassoni/Flash90)

The coronavirus outbreak has so far caused some NIS 1 billion (some $290 million) in damage to the Israeli economy, the Finance Ministry said Monday.

If the virus continues to spread in Israel, it could cause NIS 12 billion (some $3.5 billion) in losses, amounting to one percent of the country’s GDP, according to the Finance Ministry’s chief economist, Shira Greenberg.

The sectors hardest hit by the outbreak are the aviation and tourism industries, including airlines, hotels, transportation firms, restaurants, shops and tourist sites.

The Health Ministry has spent some NIS 150 million on measures to contain the virus, including in its operations at Ben Gurion International airport and setting up isolation facilities for those infected with the virus, the Ynet news site reported.

The Tel Aviv Stock Exchange has also fallen sharply, with the TA-35 index down 4.67% in the past week. The index continued its decline on Monday, dropping 1.18%.

Finance Minister Moshe Kahlon last week ordered an internal Finance Ministry team set up to monitor virus-related developments.

Israeli trading partners, including China, are likely to suffer a significant hit to their economies due to the virus, which could in turn affect Israel. Uncertainty and fear could curb investments, and workers could be kept home due to illness or quarantines.

El Al airlines has been particularly hard hit by the virus outbreak, telling investors it expects to see a loss of $50-70 million in revenue between January and April. Its shares on the Tel Aviv Stock Exchange dropped 22.74% in the past month.

The airline on Sunday starting axing incoming workers, and said last week it could fire up to 1,000 people. Prime Minister Benjamin Netanyahu vowed to step in and to help El Al and other Israeli airlines.

The novel coronavirus emerged in China in December and has since infected over 88,000 worldwide and claimed over 3,000 lives, almost all of them in China. Israel has confirmed 12 infections and no deaths.