Soaring unemployment and shuttered businesses amid the coronavirus outbreak has prompted the Bank of Israel to buy $13.4 billion in government bonds in a desperate effort to support the country’s declining economy.
The move is one of a number of measures being taken by the bank to stabilise the economy. Having initially underestimated the impact of the coronavirus outbreak, predicting a loss of less than one per cent to Israel’s GDP, scenes of skyrocketing unemployment, government restrictions, shuttered businesses and consumer fears, has forced a dramatic rethink.
Israel’s vaunted tech industry is amongst the sectors worst hit. According to the Times of Israel, one-third of tech companies are planning on firing employees due to the coronavirus pandemic. Five per cent are said to have already fired workers, and nearly two-thirds have put a freeze on hiring new people.
Describing the bleak picture of the Israeli economy the bank said in a statement: “In recent weeks the economic conditions in the Israeli economy have worsened significantly in view of the spread of the coronavirus and the measures taken to prevent it.”
“Economic activity has been seriously disrupted and volatility in the financial markets has increased,” the bank acknowledged before announcing the billion-dollar bond purchase.
Some 573,000 Israelis have lost their jobs over the past several weeks due to the coronavirus pandemic. The increase has pushed the country’s unemployment rate to 17.6 per cent.
In stark contrast, before the outbreak of the virus, Israel’s unemployment rate stood at 3.6 per cent, which was one of the lowest in the OECD (Organisation for Economic Co-operation and Development).