Search

IMF forecasts Israeli economy won’t recover until 2022

The International Monetary Fund (IMF) released a report predicting that the Israeli economy will shrink 6.3% in 2020 and won’t won’t recover fully until 2022.

By Lauren Marcus, World Israel News

As talk of lifting restrictions and restoring the economy begins, the International Monetary Fund (IMF) released a report predicting Israel’s economy will contract 6.3 percent in 2020. The report also says the Israeli economy will likely not recover fully until 2022.

The IMF report says the Israeli economy will grow just 5 percent in 2021. In terms of unemployment, the report forecasts a 12 percent unemployment rate at the end of 2020, and a 7.6 percent unemployment rate at the end of 2021. Negative inflation of 1.9 percent is also expected for 2020.

More than one million Israelis – 26 percent of the Jewish state’s workforce – have been fired or placed on unpaid leave due to the economic fallout from the coronavirus pandemic. According to an Israeli Central Bureau of Statistics survey on March 31, 42 percent of businesses lost more than 50 percent of their income since the outbreak of the crisis, and the impact was felt most by small and medium-sized businesses.

Two weeks ago, the Bank of Israel released a report far more optimistic than the IMF’s, forecasting the economy would shrink by 5.6 percent in 2020, but a massive growth spurt of 8.7 percent in 2021 would make up for it. The Bank of Israel’s report was predicated on the assumption that the country’s economy would be operating at 100 percent in June.

The IMF forecasts that the only countries who will see positive growth in 2020 will be India and China, with modest gains of 1.2 percent and 1.9 percent. Staggeringly high unemployment rates of 20 percent are expected for Spain and Greece, and the United States will have a double-digit unemployment rate of 10.4 percent.

Despite initial predictions that the coronavirus pandemic would cause at most a short, V-shaped recession, the IMF is now forecasting a massive global economic crisis that “will dwarf the 2008 recession.” The IMF believes the coronavirus recession will be one of the worst the world has ever seen, surpassed only by the Great Depression of the 1930s.