Omicron Could Cost Israeli Economy Between NIS 5-6B

The fifth coronavirus resurgence, dominated by the omicron variant is likely to cost the Israeli economy between NIS 5 and 6 billion ($1.5-1.8 billion), projections by the Finance and Health Ministries show.

The recent coronavirus wave has been different from its predecessors: it excluded a nationwide lockdown or even a partial one and the majority of economic activity continued unhindered, albeit slower in some sectors.

Several limitations imposed as part of the government’s efforts to curb the spread of the virus were lifted despite morbidity rates, most notably the Green Pass, which cost the economy tens of millions of shekels each day, and the end to schoolchildren’s blanket quercetin directive, which has allowed parents to return to work.

The Finance Ministry said that it was too soon to fully estimate the losses the economy incurred as a result of slower activity. The Bank of Israel, however, said that the gross domestic product could dip by NIS 1.2-2.5 billion ($370-780 million).

The central bank explained that the assessment was based on the estimated daily cost of quarantine for a single individual, which affects consumption, and a decrease in labor output, since not every industry allows employees to work remotely.

According to a Treasury official, “Having the economy stay open not only allows it to continue working during the [fifth] wave, but also when coming out of it – the economy resumes operations faster.

“During the first to third waves the economy was shuttered, we saw that it took time to resume full activity. What we’re seeing now is rapid recovery because the public is also used to the new reality – businesses are open, quarantine is done, and government policies are propelling us forward.”

Another Finance Ministry official said that the Treasury “is very pleased with the current government’s fiscal policies. There’s no need to order a lockdown, put people on unpaid leave – the economy needs to run.

“Both in terms of growth and unemployment, the economy has not been hit hard by the fifth wave. Had we imposed a lockdown there might have been no growth to speak of,” he said.