Israel economy projected to expand 4.6 in 2021, says finance ministry

Fast COVID-19 vaccinations and decreasing coronavirus cases are believed to have a good economic impact as Israel’s Finance Ministry said on Sunday that the country’s economy in 2021 is likely to expand by 4.6%.

However, if the health sector of Israel goes critical because of new virus mutations or inoculations taking longer than expected, forcing fresh restrictions, the finance ministry said the economy would just expand by 1.9%.

The finance ministry added that Israel’s economy performed relatively well in 2020 and even outperformed a 5.5% contraction predicted by OECD.

On the other hand, the Bank of Israel has predicted a 3.7% economic downturn in 2020 and a 6.3% expansion in 2021 provided that the inoculation’s current rapid pace is sustained. Otherwise, the central bank would be looking at a 3.5% economic rebound.

Moreover, the Bank of Israel, which has been unwilling to slash short-term interest rates beyond its current 0.1% rate on hopes that rapid vaccinations will boost the economy, pledged on Thursday to buy $30 billion of foreign currency in 2021, higher from last year’s $21 billion.