The Ministry of Health has invested over NIS 100 million to date in its efforts and deployment to prevent the coronavirus from spreading to Israel, according to information obtained by "Globes." The amount spent on preparation came from the monthly budget allotment given to the Ministry of Health by Accountant General Rony Hizkiyahu. There has been no need so far for a budget allocation at the expense of other ministries.
The state has been managed since January according to a continuation budget, with the Accountant General allocating a NIS 40 billion monthly budget: one twelfth of the 2019 state budget.
Prices on the Tel Aviv Stock Exchange were down sharply as a result of growing concern about an outbreak of coronavirus in Israel and its potential effect on the economy. Economists and analysts said that the negative effects on the Israeli economy were unavoidable, even under the optimistic assumption that the disease would not reach Israel. The Bank of Israel is scheduled tomorrow to announce the interest rate for the next six weeks.
Bank Hapoalim (TASE: POLI) economists said that the coronavirus had increased the likelihood that the Bank of Israel would cut the interest rate in one of its upcoming decisions. According to these economists, "The probability of an interest rate cut in the US and Asian countries has increased, and as time passes, it is likely that we will see negative figures and reduced growth forecasts. For the Bank of Israel Monetary Committee, each of these factors could be enough reason to cut the interest rate."
In their economic review published today, Bank Hapoalim's economists state that growth in Israel is likely to be affected even if the coronavirus does not reach Israel. The number of tourists visiting Israel is likely to drop, and some exports of goods to China and the neighboring countries are at risk if production in East Asia does not get back on track soon. Beyond that, the bank's economists say that the coronavirus is likely to affect the shekel exchange rate if global stock prices fall substantially. They expect that in such an event, the pension savings companies will reduce their currency hedging, which they say will have an effect equal to the purchase of over $5 billion in foreign currency. "This does not guarantee shekel depreciation, but it will facilitate a lull in the Bank of Israel's foreign currency purchases," Bank Hapoalim writes.
Economist Dr. Roby Nathanson predicts that an outbreak of the coronavirus is likely to cause shortages and high prices for products produced in China, if paralysis in manufacturing of goods persists in China and alternative suppliers are not found. He also expects a negative impact on incoming tourism from China, after 49% growth in tourism from China to Israel in 2019. Further damage will result from barring the entry of passengers from Thailand and South Korea, from which more tourists visit Israel than from China. Nathanson predicts that farmers and construction companies in Israel will ask for larger quotas for importing foreign workers from countries not affected by the coronavirus to replace foreign workers from China and Thailand.
Published by Globes, Israel business news - en.globes.co.il - on February 23, 2020
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