The Israeli economy has officially entered a severe recession, with a drop in Gross Domestic Product for the second consecutive quarter. According to the Central Bureau of Statistics, in the second quarter the gross domestic product dropped 28.7 per cent in annualized terms and consumer spending, investments, imports and exports plunged. The pandemic lockdown in the spring that paralyzed many workplaces not only led to severe drops in spending and investments, but devastated tourism and aviation.
These are exceptional statistics that haven’t been seen in Israel in at least four decades, and they are accompanied by high unemployment, currently 12.4 per cent. Of course, Israel is not the only country with these problems. Britain, France, Italy and Spain, where the infection and death rates from COVID-19 were very high, suffered greater economic damage than we did. Prime Minister Benjamin Netanyahu knows that the economic crisis is his weak spot, by which he will ultimately be measured. That’s why he was so quick to declare that Israel’s economy was healthy compared to those of Europe.
But Israelis aren’t so impressed by international comparisons, and they’re giving him low marks for managing the economic crisis.
Channel 12 News reported a poll this week that showed 65 per cent of the public believing his performance in handling the economic crisis has been poor.
These figures stem from a number of mistakes made by the government since the beginning of the crisis, including making promises that weren’t kept, wasting resources and directing incentives to people and businesses that didn’t need them and encouraging employers to furlough workers rather than encouraging them to keep them employed, which is one of the reason that Israel’s unemployment rate is so high.
This statistic is especially worrisome, because the more time that passes, the more likely it is that the high unemployment rate will not be temporary.
Under these circumstances, the proper thing to do would be to formulate economic programs and a state budget for 2021, to provide at least some degree of certainty for the economy and businesses. But Netanyahu is managing the health and economic crises at the same time as he must manage his personal legal crisis, which is why the making of decisions with national impact is getting mixed up with personal and irrelevant considerations.
- Israel pours billions into employment but has no idea how many are jobless
- Israel's GDP shrinks in biggest decline in at least four decades amid coronavirus crisis
- The coronavirus crisis has set Israel’s economy back four years
The result – a lack of political stability and threats of elections, populist economic moves and delays in making crucial decisions, like approving a national budget for 2021.
Netanyahu is an expert at marketing failures as achievements, but this problem won’t be solved by unfounded self-praise, only by a serious focus on economic rehabilitation. This requires political stability.
The above article is Haaretz’s lead editorial, as published in the Hebrew and English newspapers in Israel.