Israel enters deep recession, says statistics bureau

Private consumption dropped by 43.4%, with a 41.7% dip in imported goods and services reported on Sunday. The prime minister claims that Israel’s drop is “half of what it is in the EU.”

By HAGAY HACOHEN
Shekel money bills (photo credit: REUTERS)
Shekel money bills
(photo credit: REUTERS)
Israel has entered a deep and difficult recession, the Central Bureau of Statistics reported Sunday.
GDP dropped 28.7% in the second quarter of 2020, the first time this has happened in 40 years, the statistics bureau said.
Consumption dropped 43.4% while imported goods and services declined 41.7%.
It attributed the results to the COVID-19 pandemic and government policies to curb it. Among them have been a nationwide lockdown, severe limitations on restaurants and public gatherings and an almost complete halt of incoming tourism. The harshest crash, 80%, was reported for leisure activities and cultural events.
Due to a lack of data on the various factors involved in the pandemic, the figures should be treated with caution, the report warned.
Prime Minister Benjamin Netanyahu said the drop in Israeli production was “7.8%, half of the decline among the nations of Europe and among the lowest in the world.” That contradicts the statistic bureau’s 28.7% decline in GDP.
This would not be the first time the government clashed with state agencies over statistics. The Finance Ministry recently reported it found a mistake in the figures released by the Bank of Israel concerning state aid offered by Israel to its citizens. The bank claimed the figure was true at the time.
In Spain and the UK, the decline in GDP was more than 50%, while in France and Italy it was more than 40%, N12 reported Sunday.
“This is the result of our responsible policy, which not only reduced the number of deaths [from COVID-19] in Israel, but also the extent of the damage done to the national economy,” Netanyahu said.
State spending increased 25.2%, in part because of the “Check for Every Citizen” plan and the Safety Net program, the statistics bureau said.
The report came the same day Netanyahu announced approval of NIS 8.5 billion for another part of the stimulus plan.
The NIS 8.5b. is part of the Safety Net program and will be used for transportation, technology and welfare projects to create 10,000 new jobs.
Some NIS 2b. will be earmarked to complete public transportation projects, including the Tel Aviv Red Line light rail, which is in danger of being halted “as costs become steeper,” the Finance Ministry reported.
NIS 750 million will be used to train workers for the hi-tech industry and promote innovation. NIS 700m. is to provide food security for poor families, a project championed by Interior Minister Arye Deri.
The NIS 8.5b. plan is joined with a NIS 300m. rescue package earmarked to help hotels during this difficult time, when tourism to the country nearly stopped.
Created by the Finance and Tourism ministries, the plan offers aid to hotels from June to May 2021 to ensure they are able to keep operating. Benefits will be scaled to match the loss of income with larger hotels, which are costlier to maintain and are eligible for larger benefits.
More than 40% of the nation’s 430 hotels are closed, they said in a joint press release Sunday.
“This is another step we are taking to preserve the Israeli economy in times of crisis,” Finance Minister Israel Katz said Sunday.
Tourism Minister Asaf Zamir thanked Katz and said: “We will continue to work to help all parties in the tourism industry overcome the coronavirus crisis.”