Israeli Economy to Grow in 2021 Amid Rapid Vaccinations

The Finance Ministry said on Sunday that the Israeli economy is likely to grow by 4.6% this year, in expectations that depend on continuing rapid vaccinations for COVID-19 and a drop in the infection rate.

The ministry added that in a worse scenario, where the situation deteriorates due to new virus strain, leading to more closures, the economy will grow by only 1.9%, adding that its forecast for 2020 is a Shrinking 3.3%.

A contraction of 3.7% was estimated for 2020 and 6.3% growth in 2021 if the rapid pace of vaccination is maintained," the Bank of Israel said.

According to the ministry, the Israeli economy performed relatively well in 2020 and outperformed the Organization for Economic Cooperation and Development (OECD) average of 5.5%, thanks to high-tech exports.

However, the unemployment remained high at 15.4% in 2020 and is expected to decline to 8.6% in 2021 in its baseline scenario and to 11.6% in a more pessimistic forecast, with average wages dropping in both cases.

Exporters are also suffering due to the appreciation of the shekel, which reached 3.11 per dollar last week, its strongest in 24 years.

The Bank of Israel said on Thursday that it will buy $30 billion in foreign currency in 2021, pressuring the shekel to 3.27 against the dollar after the statement.

Meantime, the growth in the July-September period was driven by sharp gains in exports by 59.7%, private spending by 42.3%, and investment in fixed assets by 17.2%.

Meanwhile, growth in the July-September was driven by sharp gains in exports by 59.7%, private spending of 42.3% and investment in fixed assets by 17.2%.