With the outbreak of the worldwide Covid-19 pandemic, and its advancement in the State of Israel, the Israeli government announced a series of limitations, and subsequent lockdowns, in order to combat the spread of the disease in the population. During the month of March limitations on public gatherings and workplaces were gradually put in place.[efn_note]Ynet; Walla!News[/efn_note] On March 12th the education system was closed down,[efn_note]Globes[/efn_note] on March 16th local lockdowns were set, and the private sector switched to a 30% capacity.[efn_note]Walla!News[/efn_note] Finally, on March 19th a more general lockdown was issued, with the Ministry of Health instructing the population to avoid going outside of the house except for essential outings.[efn_note]Hadrei Haredim[/efn_note] On March 25th a 100-metre limit from one’s household was issued, allowing only for outings for medical services, stocking up for food, protests and arrival to workplaces that were deemed essential.[efn_note]Haaretz[/efn_note]
In mid-April, the government set a plan for easing out of lockdown, excluding a greater variety of activities from the 100-metre limitation, allowing for more stores to open (such as furniture shops, computer equipment, book shops) and allowing the private sector to return to offices at a 30% capacity.[efn_note]Calcalist[/efn_note] In the beginning of May the 100-metre limitation was removed, and a plan was set in place to allow for the gradual opening of various businesses, and for gatherings of larger amounts. This also allowed for the opening of the education system by the end of May, including higher education.[efn_note]Walla!News[/efn_note]
Following a massive increase in infections, the Israeli government issued a second lockdown, being the first developed country to issue a second nationwide shutdown.[efn_note]Bloomberg[/efn_note] The regulations limited outings to a kilometer from place of residence, including a limitation on protests.[efn_note]Globes[/efn_note] The private sector was also closed down, with only essential places permitted to continue working.[efn_note]Mako[/efn_note] After a lockdown of four weeks, easing of regulations began, with the kilometer limitation lifted. Workplaces that are not client facing were permitted to return to operation. These changes did not apply to places that were marked as “red zones”.[efn_note]Mako[/efn_note] Later on, street shops were allowed to open (excluding closed shopping centers)[efn_note]Mako[/efn_note] while the education system for students over the fourth-grade remains closed. Certain client facing businesses such as hotels, restaurants and gyms also remain closed for the time being.[efn_note]Maariv[/efn_note]
The Impact on the Economy: Selected Sectors
The tourism sector in Israel, as in many countries around the world, was majorly affected during the pandemic and the various lockdowns. Prior to the crisis, in 2019 Israel saw 4.5 million tourists from abroad, and a revenue of NIS 12 billion to the state treasury.[efn_note]TheMarker[/efn_note] While the industry recuperated to a degree during the summer months of 2020, the second lockdown caused another severe blow to the industry.[efn_note]Ynet[/efn_note] The hotel industry is only set to open again in December, though self-contained rental units have been allowed to return to operation.[efn_note]Ynet[/efn_note] The southern city of Eilat, whose economy heavily relies on tourism, has been most adversely affected, experiencing 80% unemployment due to the lockdown.[efn_note]Ynet[/efn_note] An initiative of the Ministry of Tourism was approved by the government to announce Eilat and the Dead Sea region as “green tourism islands”, in order to allow the city to return to operation. However, for now the restaurant sector has been excluded from the plan.[efn_note]TheMarker[/efn_note]
While during the first lockdown, the real-estate market saw a decrease in the number of apartments sold (a decrease of 48.4% in February-April compared to the previous three months[efn_note]Calcalist[/efn_note]) the month of August saw an increase in sales.[efn_note]Globes[/efn_note] During the month of September, the demand for mortgages was higher than it was a year prior.[efn_note]Walla!Finance[/efn_note] Moreover, despite the pandemic, apartments prices continue to rise,[efn_note]Walla!News[/efn_note] as fewer new projects are being built.[efn_note]Globes[/efn_note]
On the other hand, commercial real-estate has seen a substantial decrease in demand, as many employees have moved to work from home, and office buildings owners have had to lower their prices in order to attract renters. This also caused renters to move from old office buildings to new ones, as prices have lowered.[efn_note]Calcalist[/efn_note] Commercial real-estate has also been affected by the state of shops on commercial streets, as many store owners have struggled to pay rent following the lockdown.[efn_note]TheMarker[/efn_note]
In the high-tech sector, the damage to overall revenues has been rather moderate, given these companies’ employees ability to work from home,[efn_note]Calcalist[/efn_note] as well as many hi-tech companies being allowed to continue working during the second lockdown at a 30% capacity.[efn_note]Calcalist[/efn_note] The pandemic seems to have hurt mostly startup companies in the early fund-raising stages.[efn_note]Ice[/efn_note] The Bank of Israel assessed in June that the reason for the decrease is that investment funds prefer to allocate their funds to companies they have already invested in, to assist them in getting through the crisis. This might affect the ability of early-stage companies to develop in the coming years.[efn_note]Calcalist[/efn_note] This has also led to a decrease in hiring in these companies.[efn_note]Calcalist[/efn_note] Though companies working in the fields of cloud, cyber, gaming, software
solutions and medical equipment, continued hiring employees.[efn_note]TheMarker[/efn_note]
In the beginning of the first lockdown, cannabis companies’ shares experienced a surge in value. As both demands increased, and the companies were granted permits to continue operating during the lockdown.[efn_note]TheMarker; Calcalist[/efn_note] Even though exporting cannabis from the country is difficult due to delays in regulation reforms, local medicinal cannabis companies still experienced growth during the pandemic.[efn_note]Globes[/efn_note] Reports in June that legislative moves to legalizes cannabis were in place, constituted another positive effect on cannabis companies’ shares.[efn_note]TheMarker[/efn_note] That said companies continue to monitor these legislative steps in order to understand the direction that the regulation will take. [efn_note]TheMarker[/efn_note] In October, the Tel Aviv stock exchange announced the launch of a sub-branch in the Biomed sector – Cannabis. The sub-branch includes 11 companies, whose total worth is NIS 1.8 million.[efn_note]Globes[/efn_note]