The third coronavirus lockdown in the State of Israel has been predicted to cost the country at least NIS three billion each week. This was estimated by the Chief Economist at the Finance Ministry, Shira Greenberg.
On the other hand, the Bank of Israel predicted this number to be at NIS 2.5 billion per week. This is because their estimation does not include the costs incurred if businesses go bankrupt. Unemployment is already at an all-time high due to the previous lockdowns and will be further boosted by the bankruptcy of businesses the third time around.
It is expected that the retail industry alone will lose at least NIS 1.4 billion in a week whereas, leisure and tourism industries have been predicted to incur a loss of NIS 500 million per week. These numbers were estimated by the economist.
The Bank of Israel released a statement with regard to its estimates. It said that their research division had reported a loss in business activity by 12% back in October, during the second lockdown. Thus, if the activity continues to decline at the same rate, the decline in output will result in a loss of around NIS 3.2 billion in a week.
In comparison, business activity fell by 22% during the first lockdown and the loss estimated at the time had been NIS 5.9 billion every week.
On Sunday at 5pm the lockdown will be initiated. For now, it will only be imposed for two weeks but, the option to extend it for another two weeks will be invoked if the number of cases in a day exceeds 1,000. Entertainment, leisure, and retail businesses will shutter down, with the exception of deliveries. Businesses that do not receive customers physically, will be allowed to operate at 50%.
As per the numbers estimated by the Economics and Taxes Division of the Federation of the Israeli Chambers of Commerce, the lockdown will cause a loss of daily revenue of nearly NIS 500 million. When multiplied by the two weeks of lockdown, the total loss incurred will be of NIS 5-6 billion.
The president of the Federation of Israeli Chambers of Commerce, Uriel Lynn, said the decision to shut down operations is an unfortunate one. He believes that the members of the coronavirus cabinet are misguided and thus, making such a harsh decision. He urged the cabinet to go back on their decision and think about the hit that the economy will take as a result of halting business operations.
In the president’s opinion, the focus of the government and relevant authorities should be on implementing stringent guidelines, rather than shutting operations down. He said that attention should be paid on how to cut the chain of infection to return to normal life as soon as possible. Lynn went on to say that a third closure, partial or complete, is like sentencing tens of thousands of businesses in the country to death.
Various freelancer unions, as well as the Federation of the Israeli Chambers of Commerce also criticized the chief economist of coming up with an unrealistic number. In their opinion, the cost of devastation to the economy of the country will be ‘much larger’.