As many as 70,000 businesses in Israel will fail this year, up to 25,000 of them directly due to the impact of the coronavirus lockdown, the business information firm CofaceBdi estimated in a report released on Tuesday.
CofaceBdi said in an ordinary year, between 40,000 and 45,000 businesses in Israel go under, but the pandemic is expected to increase that number by about 50%.
“For many years already the rate of business failure in Israel has been higher than the usual rate for countries belonging to the Organization for Economic Cooperation and Development,” said Eyal Yanai, co-CEO of CofaceBdi. “This year, too, the rate of problems due to the coronavirus in Israel is expected to be higher than the world average.”
Globally, the number of business failures is expected to increase by 25% in 2020 due to the pandemic. In the United States that number is forecast to rise 39% while in countries such as Britain, the Netherlands and Hong Kong the increase will be 35%.
CofaceBdi sees the damage to the Israeli economy coming in two waves. The first will be sectors that feel the impact immediately, such as restaurants, hotels, tourism, aviation, transportation, leisure services and retail, but not food and online retailers. So will business and personal services, as will many export-oriented companies.
CofaceBdi said those sectors encompassed about 220,000 businesses, of which close to 60,000 have been hit especially hard.
In the second wave, CofaceBdi said, based on the experience of earlier crises, vulnerable sectors include real estate and certain industrial sectors. The second wave will come as consumer purchasing power declines due to rising unemployment and liquidity problems arising from the first wave, it predicted.
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An additional wave of business failures may follow, encompassing up to 15,000 additional businesses, CofaceBdi warned.