Israeli Officials Brace for Greater Virus Hit to the Economy

(Bloomberg) -- Israel’s Finance Ministry thinks the coronavirus outbreak may hit the local economy harder than expected.

The ministry’s latest internal estimate is that the disease will pare economic expansion by at least around 0.5 percentage point this year, according to a person familiar with the matter. The person asked for confidentiality to discuss the internal estimate and cautioned that such figures change frequently.

Shira Greenberg, the ministry’s chief economist, previously said economic growth would take a 0.2 percentage point hit if the outbreak lasts for one quarter. In January, central bank staff forecast the economy would expand 2.9% in 2020.

A Finance Ministry spokeswoman wouldn’t comment beyond the prior public estimate. Top officials say Israel’s economy, which grew 3.5% in 2019, remains robust and that there hasn’t been a significant macroeconomic impact from the coronavirus.

The dollar-shekel pair weakened Monday to its lowest levels since November 2019, before recovering slightly to trade at 3.5017 at 10:38 a.m. in Tel Aviv.

Israel has restricted foreign travel from about a dozen European and Asian countries, and more than 20,000 people are currently under home quarantine to try to contain the disease. The country has 39 confirmed cases so far, and there have been no fatalities.

Central bank officials have said they’ll use the tools at their disposal in case of an economic or financial deterioration. In a statement last week, the Bank of Israel said there’s no evidence yet of a significant blow but that the impact could grow if the crisis continues and Israel widens preventive measures.

To contact the reporter on this story: Ivan Levingston in Tel Aviv at ilevingston@bloomberg.net

To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Amy Teibel, Paul Abelsky

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