Private consumption in the Israeli economy is recovering quickly and is almost approaching levels before the coronavirus crisis, the Bank of Israel reports based on data from credit card use, which was published today.
The Bank of Israel said, "The recovery of activities in some branches is substantial following the relaxations." In the fashion clothing, electrical goods, and furniture, Israelis are spending in similar amounts to before the crisis, and purchases of fuel have seen a substantially strong recovery. But restaurants, education and leisure spending have seen a weaker recovery, while tourism has still not recovered. These latter sectors are likely to recover now with restaurants, cafes, bars, clubs, events halls and hotels all set to reopen next week.
The Bank of Israel also reported that electricity consumption is still 10% below average, although this has changed this week with the heat wave causing record electricity consumption.
Despite the encouraging data, the Bank of Israel says it is still too early to tell whether the recovery in private consumption through credit card purchases is a permanent or temporary trend. The Bank of Israel is very aware that many consumers would have been forced to postpone the purchase of non-essential goods or services until after the lockdown and have now rushed out to buy them.
In addition, the woeful state of the employment market must be taken into account, which has still not recovered with 100,000 new jobless added since April 19. There are still hundreds of thousands of Israelis on unpaid leave and many Israelis fear for their jobs in the coming few months. This trend could indicate less private consumption and more money being saved. With all this taken into account, the Bank of Israel sees that there could be reduced spending after the initial burst of buying after the lockdown fades out.
Published by Globes, Israel business news - en.globes.co.il - on May 20, 2020
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