BoI sees NIS 2.5b damage if Omicron wave continues 20 days

Amir Yaron Photo: Yonatan Bloom

Governor of the Bank of Israel Amir Yaron: In that scenario, this is not a macro-economic event.

"The daily cost of isolation for an individual worker is estimated at NIS 273," Governor of the Bank of Israel Amir Yaron said today at a session of the Knesset Finance Committee, referring to the economic cost of the spread of the Omicron coronavirus variant. "If we're looking at a scenario in which there are 15% positive results out of 300,000 daily tests," Yaron continued, "then continuation of this wave for ten days will cost the economy NIS 1.2 billion, or damage of NIS 2.5 billion for twenty days.

"We aren't epidemiologists, but most of the estimates at this stage speak of a short wave. A long as we're in that scenario, it’s not a macro-economic event, and it's desirable to continue with ad hoc compensation mechanisms as they are today." Yaron said.

The Bank of Israel's estimate of the economic damage of a day's isolation was calculated on the basis of workers in every sector who cannot work from home, multiplied by their average daily pay, multiplied by the weighting of each sector. To this, the bank added the cost of reduced consumption.

"The problem faced by the decision makers relates to more critical scenarios, such as, for example, impairment of a vital service because of the number of workers tested, or one in which the wave drags on, or a non-linear impact, that is, a point at which a business is unable to function because workers being in isolation. All these scenarios could lead to a high macro-economic impact. To give a benchmark that we can talk about, it would be the third wave, which cost NIS 7-8 billion, and that's half a percent of GDP," Yaron said.

"At the moment," he continued, "it's important to be focused and to understand that our level of uncertainty is very different from what it was in March 2020. At present, the basic scenario is that this wave will be over shortly, as reflected in the forecast of 5.5% growth in 2022."

Published by Globes, Israel business news - en.globes.co.il - on January 10, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Amir Yaron Photo: Yonatan Bloom
Amir Yaron Photo: Yonatan Bloom
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018