As the coronavirus crisis worsens: 'State needs to reach deeper into its pockets'

A financial strategist tells Arutz Sheva that the Bank of Israel & gov't need to take action to prevent the severe recession in the making.

Nitzan Keidar ,

Caronavirus economy
Caronavirus economy

The Israeli shekel continued to gain on the world's leading currencies to start off the business week contrary to the gloomy prognosis of the local market.

David Resnick, financial strategist at Leumi Capital Markets, explained to Arutz Sheva why the shekel has continued its improbable upward trend.

"The shekel reached record highs against all global currencies last week and strengthened significantly against the dollar, achieving its peak since early in the calendar year. This is the result of capital movements that continue to benefit the shekel - more dollars are entering the country since imports have been hit harder than exports. It remains to be seen whether this trend will continue now that we've had a rise in morbidity…" said Resnick.

According to him, with a second, more deadly coronavirus wave threatening to spin out of control, the Bank of Israel needs to do more to help individual citizens and businesses deal with the crisis. "The Bank of Israel is expected to make an announcement regarding interest rates tomorrow and while we don't expect it to lower rates, we do foresee a more pessimistic overall outlook alongside an updated growth forecast for the [remainder of the year]. If the downward spiral continues, we may see interest rates reduced to the absolute zero level...The Bank of Israel will take measures similar to those of other international markets to help the economy in its difficult battle against the virus."

Resnick said it's also crucial for the state to take more concrete steps. "The government needs to reach deeper into state coffers and take out more money. Since the beginning of the crisis, countries around the world have spent considerable sums of money to bolster local markets. Israel's Ministry of Finance made some pretty big promises it has yet to make good on."

"I think we're slowly realizing that without significant government assistance, it will be very difficult for the economy to recover. We are in the midst of a major crisis with a very high unemployment rate and the Bank of Israel's steps are insufficient," he added.

"The more the government supports the economy - whether through higher unemployment benefits, financial aid for the self-employed and severely affected businesses, the sooner we'll see a return to normal ... I hope the government starts doing more in the near future. We're not doing well and it's high time to act," Resnick concluded.