Israel’s Economy Falls 7.1%, Sharpest Drop in 20 Years

By Stefan J. Bos, Special Correspondent Worthy News

(Worthy News) – Israel’s economy faces its sharpest decline in 20 years as it contracted by 7.1 percent in the first quarter of this year, official figures show.

The Central Bureau of Statistics (CBS), which released the numbers Monday, linked the difficulties of the Jewish state to the coronavirus pandemic.

It warned that the economic decline was more severe than after the 9/11 terror attacks in the U.S. in 2001 and the 2008 global financial crisis.

Private consumption saw the most damage this year, with consumer spending falling a whopping 20.3 percent. Investment in fixed assets dropped 17.3 percent, the CBS said.

The only area showing a sales increase was food, beverage, and tobacco, which rose by 5.8 percent compared to the previous first quarter.

Everything else, ranging from clothing to household goods, cars, small electrical goods, furniture, and jewelry, saw a decrease in spending.

The CBS also noticed that Israel’s exports dropped 5.9 percent in the January-March period, while imports declined 27.5 percent.

Government spending dipped 10.3 percent. Despite the financial struggles, the government pledged to allocate 500 million shekels ($142 million) to fund unemployment benefits for the self-employed.

The announcement followed protests by self-employed workers and small business owners against what they view as the government’s insufficient response in helping them survive the pandemic. Artists are among the hardest hit by coronavirus-linked lockdown regulations, with concerts, plays, and events banned or limited.

“This [government payment] is a historic correction to historical injustice,” said Economy Minister Amir Peretz. “The self-employed are a very important part of the Israeli economy; they are one of the most significant engines for growth.”

CBS figures suggested that Israel will need that growth, soon. The Bank of Israel expects a poor first half of 2020 due to the virus outbreak that closed much of the economy for weeks. But it predicts an improvement in the final six months of this year and into 2021.

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