Economic impact of coronavirus will remain long after illness disappears

This is a crisis that no one expected or could prepare for. Even worse, it is impossible to estimate when it will end.

A woman uses an ATM at a branch of Israel Discount Bank in Tel Aviv, Israel (photo credit: REUTERS/BAZ RATNER)
A woman uses an ATM at a branch of Israel Discount Bank in Tel Aviv, Israel
(photo credit: REUTERS/BAZ RATNER)
In recent weeks, Israel and the whole world have been in a state of an unprecedented crisis, accompanied by confusion, uncertainty and anxiety.
In addition to anxiety being health-related, many businesses closed in order to maintain public health, as prescribed by strict Health Ministry rules. Among the closed businesses are entertainment venues, restaurants, theaters, cinemas, offices that provide various services, and more.
The damage caused to the business sector is very severe.
In addition to some businesses closing, others have reduced their activity by a significant percentage.
Many employees are on an involuntary furlough and unemployment has surged to an unprecedented rate
Senior officials at the Finance Ministry, Bank of Israel and throughout the business sector estimate that damage to the Israeli economy as a result of the pandemic could reach NIS 100 billion, assuming the virus will be eliminated during the second quarter of 2020.
Senior economic officials also predict that the crisis will lead to a sharp decline in economic growth, from about 4% in the last quarter of 2019 to 0%, according to an optimistic scenario, or to a negative growth if the crisis is not resolved by summer.
All sectors, without exception, are suffering the effects of this crisis, including inbound and outbound tourism agencies, event-production companies, entertainment venues, restaurants, coffee shops, fashion chains and more. However, those who are suffering the most severe damage are small businesses and middle-market companies. Even before the crisis, small businesses and middle-market companies in Israel were routinely dealing with challenges and obstacles, and striving to survive on a daily basis. Such obstacles include liquidity-related issues, difficulty obtaining credit, burdensome regulations, a cumbersome bureaucracy, difficulty recruiting highly qualified employees and challenges in acquiring advanced technology that can push business forward.
We are in the midst of a developing global crisis, the effects of which are evident across all aspects of life. This is a crisis that no one expected or could prepare for. Even worse, it is impossible to estimate when it will end.
The State of Israel has been dealing with crises throughout its entire existence, only this time we are in a different kind of war, and as all other countries, we are fighting an invisible enemy about which we have little intelligence.
Currently, Italy is in a state of collapse, to be followed by Spain and France. In my opinion, the UK and USA are on the way as they are starting to experience the magnitude of the pandemic. Unlike Israel and South Korea, they have not yet taken many significant preventive measures.
It is important to keep in mind that every crisis ends eventually, and once the coronavirus pandemic is over, we will have to go back to our little corner of the world and take care of businesses that suffered the crisis effects, so that we will be able to embark on a path of economic and business growth once again.
Economic leaders have a national duty to act quickly in order to find ways to alleviate the burden of bureaucracy and provide simple, convenient solutions for businesses. These include reducing the number of fees, making it easier to obtain credit, reducing taxes, assisting with the employee hiring process, shortening planning and construction processes, assisting with process implementation, streamlining regulatory proceedings and more.
In today’s health-threatening reality, and even more so, during this period of global crisis, it is imperative to provide small businesses and corporations with a reasonable level of certainty, as well as a series of significant benefits and incentives to allow them to recover quickly and continue running their businesses, development centers and factories.
Even when we solve our economic problems here at home, the effects of the crisis will still have effects and consequences, since we do not live in isolation. We export and import goods globally. This is a world war against an enemy we do not know. In times like these, political disputes should be set aside. We should stay united and focused on protecting the public health and finding ways to assist the economy.
The writer is managing partner and a founder of RSM Shiff Hazenfratz & Co., and former president of the Institute of Certified Public Accountants in Israel.