The depreciation of the shekel against the dollar is a positive development that should help the Israeli economy overcome the coronavirus crisis, global ratings agency S&P believes, in an initial assessment of the situation. The global rating agency expects Israel to avoid a recession in 2020 and even record 2% growth, even though Israel's Ministry of Finance itself sees a best case scenario of 0% growth in 2020. However, S&P says, "A full recession is not expected at this stage due to the robustness of the domestic economy and it will happen only in the event of an additional hit to the economy such as a geopolitical event or the collapse of real estate prices."
S&P said, "Although Israel is also suffering a substantial slowdown because of the coronavirus outbreak, the local currency is actually depreciating, which is a factor that could help in the future by strengthening exports and bringing back inflation."
S&P also pointed out that Israel's original economic growth forecast was significantly higher than the euro bloc but that the Covid-19 outbreak will ultimately depend on the length and severity of the virus and the degree of success of the measures taken by the government and the Bank of Israel.
However, S&P's economists see a worldwide recession with global GDP growth of just 1%-1.5% in 2020.
Published by Globes, Israel business news - en.globes.co.il - on March 19, 2020
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