Strong basic economic data increase the resilience of the Israeli economy to Corona implications

The Bank of Israel monitors developments in the financial markets, in Israel and in the world, and on policy measures by central banks around the world. This is in light of the spread of corona virus in the world and in Israel. On Saturday, the number of people infected with the virus rose to 25.
Last week, the weekly monetary committee * chaired by the Governor. The Research and Markets Division presented the latest developments, updates to growth forecasts around the world, and estimates of potential impacts. The committee discussed, among other things, the steps taken by other central banks. In addition, various scenarios of the direct impact of preventive measures taken in Israel on economic activity were discussed. At this stage, despite the specific impact of firms in a variety of industries, there is no evidence of a significant macroeconomic impact on the Israeli economy, and in a scenario where the spread of the virus will be halted in the coming months, the global economy is expected to recover relatively quickly. If the crisis is prolonged, and in particular if prevention measures in Israel are exacerbated and lengthened, considerable economic impact is expected. The Committee considers that the financing conditions in the economy at present are very favorable, and the low interest rates combined with the ongoing foreign exchange purchases policy provide the necessary support to the economy. The Monetary Committee will hold the periodic monetary discussion in which the interest rate decision is made on April 5 and 6, In the event of significant deterioration in economic or financial conditions, the Commission shall use a variety of tools at its disposal at any time.
Yesterday, the Bank of Israel's periodic meeting of the Financial Stability Committee ** was chaired by the Governor of the Bank of Israel, and a central topic of the committee's meeting was a discussion of the economic and financial effects of the Corona virus on the economy. Committee members reviewed the situation in their areas of responsibility, and noted that while stock markets around the world and in Israel have responded to price declines and volatility, there are no signs of financial and liquidity dysfunction in the various markets. The Financial Stability Committee monitors all developments in the system, and is a platform that enables optimal coordination between regulators. Supervisory bodies have the tools to deal with challenges that may arise in a scenario that will exacerbate financial risks globally and in Israel.
The bottom line that emerges from the discussions and analyzes at the Bank of Israel is that this is a rolling event, and there is great uncertainty as to the continued spread of the virus and its implications in terms of economic activity in the world and in Israel. The uncertainty is due to three factors: 1. The magnitude of the spread of the virus in other countries as well as the extent of the spread of the virus in Israel. 2. The power of preventive measures to be taken in various countries and in Israel and the economic impact of these measures. 3. Duration of the event.
The strong basic economic data of the Israeli economy - among them a low debt / GDP ratio, low current account surplus and a high level of foreign exchange reserves, and a robust financial system, increase the resilience of the economy to developments.
The Bank of Israel continues to monitor these developments on a regular basis, and is in close contact with relevant parties in the government, especially the Ministry of Finance, and the economic and financial system.