(Bloomberg) —
Israel’s economy contracted the most since at least 1975 as a result of the Covid-19 pandemic and a near-total lockdown imposed by the government to bring the outbreak under control.
Gross domestic product shrank a seasonally adjusted, annualized 28.7% in the second quarter, according to the Central Bureau of Statistics, more than quadruple the drop in the previous three months and worse than the median estimate in a Bloomberg survey for a decline of 27.7%.
The disease’s spread and Israel’s containment measures hurt categories nearly across the board, with private consumption taking the biggest hit, data released on Sunday showed.
Key Insights
The deterioration follows the poor performance in the first three months of the year, which marked the first quarterly contraction since 2012 and the worst economic showing in at least 25 yearsDuring most of April, Israeli officials imposed restrictions on movement and businesses during the height of the first wave of cases and only began easing up regulations from late April, with travel still largely closed to foreignersPrivate consumption, an engine of Israel’s economy, led declines with a drop of 43.4%, while imports fell 41.7% and output of the business sector saw a contraction of 33.4%Government consumption expenditure rose 25.2%, marking the only gain in GDP components, as the Finance Ministry deployed roughly 200 billion shekels ($58.8 billion) of crisis stimulus to boost the economyFor 2020, the country’s central bank expects a contraction of 6%, with growth rebounding 7.5% next year
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For in-depth reporting on the role that Israel’s reopening of schools played in the country’s resurgence of coronavirus cases, see our feature here. And here is a recent story on Bank of Israel Governor Amir Yaron’s comments urging the government to pass a budget while warning about possible damage from new elections.
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