How much does the economy cost – general

The government has decided to move to a tight closure that will begin Sunday at 5 p.m. for at least two weeks. The main decision is to close jobs that receive an audience, chief among them commerce, close personal services and hotels in the Green Islands. In addition, the frontal activity in the education system for fifth to tenth grades will be stopped. Leaving the house for unauthorized needs will be limited to one kilometer. Restaurants, which are closed for seating from the second closure, will only be able to operate with deliveries. The Bank of Israel tries to estimate the costs of closure to the economy – More from the second quarantine and are expected to remain so. In this brief memorandum we will estimate the cost of entering the third closure, based on past experience.

“Based on data from the National Accounts (for the first three quarters) and other indicators, the Bank of Israel’s Research Division conducted an estimate of the activity rate in the economy in each of January-October. We estimate that the average activity rate in April, when the first closure occurred, was 80. This means that the level of activity was 20% lower than what was expected to exist in the absence of the corona and closures imposed on the garden. It should be noted that this is the average for April, when the relief began at the end of the month and the beginning of the month. Of the first closure, before Passover, the activity rate was lower.

“After the first closure, when the economy opened, activity soared rapidly so that the average activity rate in the summer months (before the second closure) was 95%. The decrease in activity was probably due to the businesses’ preparation for long-term work and partial compliance with the guidelines. We estimate that on average in October, the activity rate was 88%, meaning that each week the activity at this level, as opposed to full activity, is a NIS 3.2 billion loss. .

“Towards the current closure, there are factors for which the weekly cost of the closure is expected to be lower than it was in the closure in October, the cost of which was estimated at NIS 3.2 billion per week: at this stage the closure guidelines are less severe than those in the second closure. Partly and the education system for young people will operate in a normal format ”

The Bank of Israel claims that although there are factors that could increase the cost of the closure, it will be lower – about NIS 2.5 billion a week. Factors for which the weekly cost of the forthcoming closure is expected to be high – “The closure in October was during a holiday period in which economic activity is in any case lower than normal. However, now the closure will apply entirely to normal business activity days (excluding holidays).

“Weighing all these factors, it can be estimated that the weekly cost of the closure that will begin next week is about NIS 2.5 billion per week, which reflects an activity rate of about 90% in the economy. Of course this is only the direct cost during the closure period. It does not include ongoing costs incurred, for example, from business bankruptcies and ongoing unemployment. In addition, the cost estimate includes only activities whose monetary value is covered by the national accounts ‘GDP definitions. That is, it does not include violations such as violations of citizens’ freedom of movement, benefit for details that are not priced in money (nature trips, family visits). Non-urgent medical and more. “