The tightening of Israel’s third nationwide coronavirus lockdown is expected to cost the country’s economy as much as NIS 4 billion ($1.3 billion) a week, according to government and central bank estimates.
New restrictions will take effect at midnight Thursday. It will be in force for at least 14 days.
At the outset of the latest lockdown, the Bank of Israel had projected weekly economic losses of NIS 2.5 billion per week, reflecting an activity rate of about 90% of the economy.
On Wednesday, it estimated the tighter restrictions on movement and commerce would worsen the weekly loss to about NIS 4 billion ($1.3 billion).
“This is the direct cost only during the closure period. It does not include ongoing costs incurred, for example, from business bankruptcies and ongoing unemployment,” the Bank of Israel said.
It noted its estimate reflects only activities whose monetary value is covered by the gross domestic product definitions and does not include items such as harm to health as a result of postponing non-urgent medical treatments and educational harm to children.
The Finance Ministry’s chief economist projected a similar loss.
The central bank noted that Israel’s first two lockdowns, imposed in the spring and fall of 2020, had cost the economy NIS 5.4 billion ($1.7 billion) and NIS 3.2 ($1 billion) a week respectively.
Israel’s economy is expected to have contracted 3.7% in 2020, with double-digit unemployment, but rebound in 2021 to the growth of up to 6.3% if the rapid pace of COVID vaccinations is maintained.