Coronavirus damage to Israeli businesses valued at $12b.
Industries hit hardest by the coronavirus outbreak include the tourism sector, hospitality, and non-food retail, which have all seen revenues drop by more than 80%.
By EYTAN HALONA man carries his shopping bags and wears a face mask in a street in Ashkelon while Israel tightened a national stay-at-home policy following the spread of coronavirus disease (COVID-19) in Ashkelon, Israel March 20, 2020.(photo credit: AMIR COHEN/REUTERS)
Economic damage to private-sector businesses, excluding the aviation sector, amounts to NIS 43 billion ($12b.) since the start of March, according to data published by the Federation of Israeli Chambers of Commerce on Thursday.Industries hit hardest by the coronavirus outbreak include the tourism sector, hospitality, and non-food retail, which have all seen revenues drop by more than 80%."The unprecedented scale of damage to the business sector and to employment necessitates the return of the economy to operations at an accelerated pace," said federation president Uriel Lynn."Models [of financial assistance] offered by the state so far, which have consisted of selective aid for all the business sector based on loans, are like putting a plaster on a wound to the aorta."The state must understand that the exit process from the crisis must include an effective business compensation process, which includes a fixed formula and clear criteria comparing revenue loss during the months of the crisis with the same period last year."Based on an analysis of employees placed on unpaid leave since the start of the outbreak, the federation said 30% of all affected workers (330,000 employees) are from the retail sector, 14% (143,000 employees) are from the hospitality sector) and a further 30% are from other service-related businesses. The president of the Israel Chamber of Independent Organizations and Businesses (LAHAV), Roee Cohen, told the Knesset's coronavirus committee that government-guaranteed loans for small businesses offered attractive terms but described its implementation as "one big bluff."While banks are tasked with administering the loans, Cohen said they are unwilling to provide funds to at-risk businesses which are unlikely to open in the coming months, including restaurants, gyms and conference venues."After the Health Ministry declared that entire industries have no chance to return to work within five to six months, that is why not even a single restaurant has received a loan," said Cohen."The banks do their own maths, and see there's no chance of returning to work. Something is rotten in the method. There isn't even a debate when a business from one of those industries submits a request for a loan."
Responding to Cohen's remarks, Finance Ministry Budget Department representative Asaf Wassercug said the ministry is aware of the issue and is aiming to solve the issue together with the banks."There are a number of ideas, and there are advantages and disadvantages [of delivering aid] through the banks," Wassercug said.According to a study published by the Central Bureau of Statistics in early April, approximately 47% of businesses reported that they will be unable to continue operations should current restrictions on the economy continue for an additional month.Only 13% of companies said they could survive for over six months in the current situation - with almost half of those companies active in the hi-tech sector.Gross domestic product is forecast to contract by 5.3% this year, but rebound by 8.7% in 2021, according to Bank of Israel researchers. The unemployment rate, which climbed to 26.25% on Thursday, is expected to shrink to 6% by the end of 2020 and reach 5.5% in 2021.
