Economists tell ‘Post’ how to solve COVID-19 recession

Can Israel pull itself out of this economic crisis?

By HAGAY HACOHEN
Israelis wear protective face masks as they shop for food at the Carmel market in Tel Aviv on August 12, 2020 (photo credit: MIRIAM ALSTER/FLASH90)
Israelis wear protective face masks as they shop for food at the Carmel market in Tel Aviv on August 12, 2020
(photo credit: MIRIAM ALSTER/FLASH90)
The COVID-19 pandemic has left more than a million Israelis out of work, reducing consumption by 43.4% this quarter over last, according to a report by the Central Bureau of Statistics. Can the nation pull itself out of this economic crisis?
Tel Aviv University Economist Dr. Wael Kraiem told The Jerusalem Post that Israel has two powerful factors that could help it surface on top: the fact it is a multicultural country and its powerful communications and technology industries.
“The future of commerce is online,” he said. “An Arab-Israeli can sit here and speak to a client in Saudi Arabia and it doesn’t matter to the client where he is. There are Jewish people from all over the world living here. We can use these advantages to become a world trading center that joins together communication and technology.”
To achieve this goal, he explained, the government would need to invest in start-ups that encourage international trade.
“The crisis doesn’t distinguish between Arabs and Jews,” he said. “Future policies should not either.”
Financial tech expert and CEO of the Economic Council For Arab Society Development (ECASD) Ziyad Abuo Habla said that “The Arab community is 20% of the population and only creates 8% of the GDP. It can become a growth engine – the solution to reduce the negative effects of the COVID-19 recession.”
He also said that people need to see large-scale projects taking place to get their confidence back, such as the country investing in new construction.
He offered that such national projects could include the creation of new train services, such as a direct line to Eilat, building new hospitals, and creating incentives to open commercial spaces in Arab cities to serve hi-tech companies, like as offices or even customer service centers for the Arabic speaking world.
He called the “Check for every citizen” program that provided stimulus funds to all Israelis “dead money” that “won’t bring consumption back.”
He said, “We need to invest in the people, to create work for them. Once they have jobs, consumption will return. I saw on the news that a former Airline captain is now willing to drive a bus to get by, these are hard times and there’s no reason to think Israelis won’t be willing to take on a new career path if a national policy that helps them to do so is created.”
Tel Aviv University Professor of Economics Asaf Razin said that one of the most important factors is planning: “We need a policy concerning how best to prepare for the future. We need a budget for 2021, that is the best forward guidance tool. We need to upgrade our educational and health systems.”
He said that Israel’s political crisis leaves the country with “no clear economic policy that can help the people.”
“Israel needs a Green New Deal,” long-standing pioneer of solar power Yossi Abramovitz added. “We could become a renewable energy light unto the nations by adopting a 100% solar power usage policy for all our daytime needs by 2030.”
He said shifting to solar would bring in $30 billion, create tens of thousands of jobs across the country and “attract investments from our new friends in the Gulf.”
“The EU is using the COVID-19 crisis for what they call ‘Green Recovery’,” he said. “We should do the same. Anything less than 100% daytime solar goal is choosing tycoons over the empowerment of most citizens of this country.”


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