Third Israeli lockdown expected to cost 2.5 billion shekels a week

Israel is entering its third lockdown this evening from 5 p.m. local time, a move that the Bank of Israel estimates will cost around 2.5 billion shekels ($776 million) a week.

A Ministry of Finance report assesses an even higher cost, up to 3 billion shekels ($932 million) a week. While the lockdown is expected to last at least two weeks, officials have already indicated that it will likely last longer. Assuming that the lockdown may continue for up to a month, the final bill may reach up to 12 billion shekels ($3.73 billion).

Will the Israeli economy - and society - be able to weather a third lockdown and eventually turn things around?

The third lockdown is expected to shut down an additional 7,500 Israeli businesses, according to a new report by the consultant firm CofaceBdi, based on the estimate that the new lockdown will last between three and four weeks. Approximately 75,000 businesses have already been forced to close in Israel due to the previous two lockdowns.

“Businesses that will shut down because of the added lockdown, have reached the limit of their abilities and their financing options, and they cannot negotiate added closures,” the consultancy said in an official statement.

The pandemic has forced companies in Israel and around the world to embrace innovation and flexibility in order to survive.

Businesses that have succeeded in switching to online sales, video-conferencing and deliveries are most likely to survive the financial crisis according to CofaceBdi.

As in the past, small and family-run businesses are the most vulnerable and at risk of shutting down. This is especially true for businesses in severely hit economic sectors, such as tourism, catering and restaurants, advertising and entertainment. Poverty in Israel has reportedly soared by 50% due to the pandemic, according to a recent report produced by the Israeli NGO Latet.

The Israeli government says it will review the situation in the country after two weeks. The lockdown is expected to be prolonged if the number of daily infections remain above 1,000 and the reproduction coefficient remains above one.

Prior to the Christmas weekend, nearly 4,000 daily virus cases were registered in Israel. The daily numbers usually go down during the weekend due to fewer tests. Overall, the number of virus cases remain high and continue to trend upwards.

More than 3,000 Israelis have died from the corona virus. Since the beginning of the pandemic, almost 400.000 Israelis have contracted the virus. There are currently over 35,000 active cases and almost 600 Israeli patients are in serious or in critical condition.

Like most countries worldwide, Israeli authorities have tried to strike a balance between the health crisis and the financial crisis. The Israeli government and the country’s coronavirus czar, Nachman Ash, insist that there is no alternative to the new lockdown.

However, critics disagree and argue that the lockdowns do more harm than good.

In parallel, Israel is reportedly preparing to vaccinate up to 150,000 people a day.

Nobody knows with certainty when the global corona crisis will end. However, the socio-economic situation in Israel and most countries is not likely to improve any time soon.