Israel economy to lose up to $1.3 billion a week from tighter lockdown

An ultra-Orthodox Jewish man walks past a shuttered shop during Israel's third national lockdown to fight coronavirus disease (COVID-19) infections, in Jerusalem's Old City

By Steven Scheer

JERUSALEM (Reuters) -A tightening of Israel’s third nationwide coronavirus lockdown is expected to cost the country’s economy as much as 4.0 billion shekels ($1.3 billion) a week, according to government and central bank estimates.

New restrictions that will tighten a lockdown imposed on Dec. 27 will take effect at midnight and last 14 days.

Prime Minister Benjamin Netanyahu has described the curbs as Israel’s final push to stop a sharp rise in COVID-19 cases while it presses ahead with a rapid vaccination drive, hoping to emerge from the crisis within weeks.

Israel’s vaccination campaign has reached nearly 15% of its 9 million population in about two weeks.

At the outset of the latest lockdown, the Bank of Israel had projected weekly economic losses of 2.5 billion shekels per week, reflecting an activity rate of about 90% of the economy.

On Wednesday, it estimated the tighter restrictions on movement and commerce would worsen the weekly loss to 3.0-3.5 billion shekels a week.

“This is the direct cost only during the closure period. It does not include ongoing costs incurred, for example, from business bankruptcies and ongoing unemployment,” the Bank of Israel said.

It noted its estimate reflects only activities whose monetary value is covered by the gross domestic product definitions and does not include items such as harm to health as a result of postponing non-urgent medical treatments and educational harm to children.

Similarly, the Finance Ministry’s chief economist projected an economic loss of 3.5-4.0 billion shekels per week.

The central bank noted that Israel’s first two lockdowns, imposed in the spring and fall of 2020, had cost the economy 5.4 billion and 3.2 shekels a week respectively.

Israel’s economy is expected to have contracted 3.7% in 2020, with double digit unemployment, but rebound in 2021 to growth of up to 6.3% if the rapid pace of COVID vaccinations is maintained.

($1 = 3.1851 shekels)

(Reporting by Steven ScheerEditing by Maayan Lubell)

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