Major indices saw steep declines after the opening bell, falling by nearly 3%. This represents a very steep drop for the major stocks, for which every fraction of a percent entails the liquidation of significant capital. The TA-90 index, the most popular index on the exchange in recent years, is shedding almost 3% and is thereby completing a decline of over 5% since Prime Minister Benjamin Netanyahu's warning on Monday that Israel should brace for international isolation and make sure it won't have to rely on the world for trade, to the point of adopting some autarkic economic postures. Netanyahu's speech was full of pessimism, with warnings that 'Israel is facing diplomatic isolation, we will have to deal with a closed economy," referring to the ongoing attitude by some countries to limit trade with Israel over the war in Gaza. But several hours later, after the surprise among the public in the media, he stressed that he was very optimistic about the prospects of Israel's economy, saying "Israel is the best place to invest" and that he was opposed to Israeli severing its trade ties with the world. "Israel's stock market is the strongest in the world; the shekel has become stronger and the deficit has shrunk despite the war...investing in Israel is the smart thing to do." He said that he meant to sound the alarm to the efforts by Iran and other countries to place an economic siege on Israel, "but we broke free."

In the trading rooms of the large banks, it is said that mutual funds, reflecting the activity of the general public, are particularly active on Tuesday. Sources in the trading rooms indicate that a substantial number of sell orders built up overnight in the mutual funds, and investment managers are liquidating assets to prepare for continued offerings until the afternoon, which is when the window closes for submitting additional sell or buy orders for the day.

At the same time, it is important to note that at this point, there were almost no visible activity from the institutional investors, which typically acquire assets when the public sells them off. In theory, should the declines deepen, an investment opportunity would arise for investment managers, known as "strong hands," but this remains theoretical, as a common adage in the capital market suggests that "one should not attempt to catch a falling knife." The Israeli stock market, despite the almost two-year war since Oct. 7, 2023, has largely outperformed the rest of the world since then.

Insurance stocks were leading the declines at the opening, having already been trading with volatility of late, with Harel's stock dropping by almost 1.5% and Clal Insurance decreasing by more than 1%. The stock of Azrieli, one of Israel's largest shopping mall operators, has also slipped by approximately 1% amid fears of a negative impact on Israelis' purchasing power.

Teva is down 2.4%, extending the stock's recent falls, which are driven by concerns that insurance companies worldwide will, for diplomatic and political considerations, favor recommending prescriptions from rival firms. Conversely, shares of Elbit Systems are up by nearly 1%, based on the belief that for the weapons maker, such days are actually beneficial for business.

In the bond market, price decreases were also noted, aligning with the working hypothesis that mutual funds are accumulating cash Tuesday out of concern for significant redemptions by the end of the day.

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Knesset economics committee proposed rolling back state-controlled milk prices, giving temporary aid to dairies, and threatened to submit legislation to slash food taxes to Western levels as public anger mounts over soaring living costs.

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Prices of dairy products have jumped after a deal between the Finance Ministry and suppliers allowed for a rise in the price of milk of more than 9%. All four of Israel's main dairies have said they would increase prices this week on both supervised and unsupervised products.

"We are deciding right now that the government will give compensation (to dairies) of 100 million shekels ($27.50 million) and take steps to return milk prices to what they were on April 30 so that in the next four months we will work on a long-term solution to this matter," said David Bitan, chairman of the economics committee during the panel's session on Thursday.

He gave the Finance Ministry until Monday to respond positively to his plan to freeze milk prices until September. Should the ministry not agree, Bitan said he would submit a bill to lower the value-added tax (VAT) on food to OECD levels, or around 8% versus Israel's 17%.

But Kfir Battat, deputy director of the finance ministry's budget department, said Israel has not subsidized products since the 1980s and prefers other measures such as tax credits to help citizens cope with inflation.

Annual inflation stands at a 5% rate but costs of food and other items have surged, partly due to supply chain issues. The Bank of Israel has responded with aggressive rate increases.

Lawmakers ahead of last November's election ran on a platform of tackling high living costs.

Yossi Shelley, director general of the prime minister's office, called the milk sector a "government-sponsored cartel" and agreed on steps needed to be taken but that he was not in favor of subsidies.

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In a new report, the Organisation for Economic Co-operation and Development (OECD) says Israel exhibited a strong rebound in economic activity during 2021, and projected solid future GDP growth for the country.

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The report, December's Economic Forecast Summary on Israel, explained that the state "is projected to grow robustly by 6.3% in 2021, 4.9% in 2022 and 4% in 2023."

An earlier OECD report from May attributed Israel's economic growth to the country's "very high rate of inoculation."

The report also anticipated "strong growth" in Israel's technological exports, but warned the country's economic "recovery could be slower if the health situation deteriorates again, or the increase in inflation is stronger or more persistent than assumed in the projections."

In order to financially strengthen the nation, the report also called on Israel to implement a series of reforms designed to encourage economic recovery.

The OECD report recommended a focus on "upskilling and education" to address high poverty rates among the country's ultra-Orthodox and Arab Israeli communities, noting that income inequality in Israel exceeds that of most advanced economies.

Additionally, the report addressed a need for strong public transportation infrastructure, explaining "Traffic congestion is a major problem in Israel."

"Costs of congestion are estimated at around 2% of GDP, above levels in other high-income economies," the review said.

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Boycotts of Israel are a new form of terrorism that is trying to hurt the citizens of Israel and the Israeli economy, President Isaac Herzog said Wednesday at a ceremony honoring Israel's late prime ministers and presidents.

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Herzog made his statements after ice cream giant Ben & Jerry's announced it would stop selling its products beyond the Green Line, or as the company put it, in the "occupied Palestinian territories."

"There is no doubt that all the prime ministers and presidents of Israel over the years would respond harshly to the loathsome calls to boycott Israel and the citizens of Israel," Herzog said.

"We must oppose boycott and terrorism in any form. The BDS campaign does not seek peace, and wants to undermine Israel's very existence. It is now taking aim at the Israeli economy," Herzog continued.

Herzog also discussed the importance of unity in Israel, saying that the late Prime Minister Yitzhak Shamir, the "father of the unity government, as a concept and a reality … insisted when he didn't have to on establishing a unity government."

"He [Shamir] led it to impressive achievements," the president noted.

"We tend to think today that it's either/or – or one can be an ideologue, or supporter of unity, because unity demands compromise. But there was never an ideologue and a notable right-winger like Yitzhak Shamir, and there has never been as radical a man of unity as he was," Herzog continued.

The president addressed Prime Minister Naftali Bennett, saying, "Mr. Prime Minister, I know you and your colleagues in the government think exactly like I do, and I hope, for all the Israeli people, that this is how you will act, for the sake of the unity of Israel."

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Prime Minister Naftali Bennett, a former software entrepreneur, pledged on Tuesday to slash regulations to cut the cost of living and help Israel's small and medium-size businesses flourish as well as its globally successful hi-tech sector.

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"We want to 'high-techicize' the rest of the economy," he told a news conference in Jerusalem. "We're going to turn ourselves into a paradise for small and medium businesses ... to make it easy and compelling to open a business and succeed."

Bennett, who took office last month, took a swipe at his predecessor Benjamin Netanyahu, saying Israel had endured 12 years of talk and "minimal execution."

Finance Minister Avigdor Lieberman said there were 209 regulators in Israel and that they acted mainly in their own interests instead of aiming to improve productivity, competition, and growth.

He pointed to a 2018 report by the Organization for Economic Cooperation and Development that said reducing the level of regulation to the OECD average would increase Israel's per-capita GDP by 3.75% in five years, and 5.75% – 75 billion shekels ($23 billion) – over a decade.

According to a report by the Prime Minister's Office and Finance and Justice Ministries, Israel's per capita GDP and productivity have lagged Western peers for a decade due to over-regulation.

Under a framework law, the government plans to establish a single authority to oversee regulatory processes and to factor speed of processing, competitiveness, and pricing into corporate regulations.

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Israel saw a 1% increase in both male and female Haredi employment in 2020, following a 3% increase between 2016 and 2020, according to Labor and Welfare Ministry data obtained by Israel Hayom.

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According to the data, Haredi employees made up just 60.2% of the workforce. While this decreased to 59.7% in 2017, the rate later increased again to a record 63.5% in 2020.

Haredi employment rates usually differentiate between men and women as the latter are more likely to work. Only a moderate increase has been seen in employment levels among Haredi men.

The female Haredi employment rate has been constantly rising, reaching a high of 76% in 2017.

Among men, the employment rate reached a record 50% in 2016.

Shas MK Moshe Arbel has worked for years to incorporate Haredim into the Israeli workforce. He said, "Employers and employees understand that the entrance of Haredim into the workplace is a welcome phenomenon that goes hand in hand with their Haredi identity."

Arbel noted, "The Haredim who work want to be incorporated in the job market without giving up on their unique identity as Haredim in the state of Israel."

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The outbreak of the coronavirus pandemic and the restrictions on movement aimed at curbing its spread have had an impact on the number of Israeli employees and their average salary.

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The number of employment positions stood at 3.252 million in November, a 13% decrease compared the 3.74 million who were employed in the same month in 2019.

According to a Central Bureau of Statistics report, the hospitality and food services sector saw a 63.4% decrease in the number of employee positions. The arts, entertainment, and recreation sector, recorded a 53.3% decrease, compared to the 17.9% recorded in the commerce sector.

In November, the average employee salary stood at 11,525 shekels ($3,510), an increase of 9.9% over the previous November, when the average salary was 10,483 shekels ($3,193).

The CBS compiled its report on average wages and employment based on the number of workers employed in that month and the total wages they were paid.

Average wages increased 15.2% in April 2020 compared to March, following the first lockdown. Following the end of the second lockdown in October, average wages increased 2.1% over the previous month. Part of the reason for this increase is that the earnings of employees who had their jobs terminated tend to be lower than the national average.

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There are around 16,000 nonprofit organizations in Israel. They employ hundreds of thousands of people – accounting for 16% of Israel's labor force –  and account for 6% of Israel's GDP.

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Following three national elections and in the absence of a national budget for 2020, the nonprofit sector has been operating under conditions of uncertainty that have affected its ability to provide even basic services. The COVID-19 shutdown has only increased this uncertainty and drops in the stock market are expected to affect the private donors and foundations, upon whom the organizations rely for their fundraising. 

Since the beginning of March, tens of thousands of nonprofit organization employees have been laid off. There has been a surge in the number of organizations seeking emergency loans. This includes nonprofits that serve Israel's most vulnerable: At-risk youth, battered women, the elderly, people with disabilities, populations with special needs and more.

The Emergency Fund for Nonprofits program includes provisions for immediate loans at a 3% interest rate, as well as loans of up to 400,000 NIS ($112,000) for up to 60 months, with a six-month grace period. Both with no requirement for guarantors. The loans can be applied for via a simple online process. 

In addition, Ogen is also offering bridge loans payable within 12 months, secured against government agreements, grants or other non-government funding commitments.

"The special terms for these loans were made possible by generous support from Bob and Trudy Gottesman, Lillian and Moris Tabacinic, The Jewish Federations of North America (JFNA) and the Federations of New York, Greater Miami, Detroit and Pittsburgh, and by Israeli supporters the Migdal Group, Boaz Raam and Shuki Ehrlich," the Jewish Agency said. 

Applications for loans are available via the Ogen website, www.ogen.org. Phone inquiries regarding loans should be made at 02-530-0780.

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More and more unemployed continue to register with the Israel National Employment Service (INES), with 35,668 added to the rolls on Tuesday alone, a jump of 49% compared to Monday.

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A total of 843,945 registered for unemployment in March 2020. Nearly 90% (89.7%) are workers who had been assigned to unpaid leave, with another 6.4% who were laid off. These numbers – which have translated into an unemployment rate of 24.1% – are unprecedented in the history of Israel.

INES Director Rami Grauer said Tuesday: "Unfortunately, our predictions came true – we reached a million unemployed in March.

"We are working on creating conditions to enable next month to start with lower unemployment by restoring the economy gradually, insofar as we can in accordance with instructions. We are prepared to provide the public with solutions, with aid possibilities laid out as part of the national emergency plan we put together," Grauer said.

He also noted that the INES had mainly been discussing salaried employees.

"If a quarter of the workforce aren't working, then it's obvious that at least a quarter of the self-employed are in a similar situation, possibly even worse. The unemployment service estimates that there are at least 125,000 self-employed workers in Israel who have already been hurt badly by the crisis," he said.

Grauer added that while he welcomed the government's plans to provide compensation and grants to the unemployed, the main goal was to ensure that the nation's businesses and self-employed could get back on their feet and pay their employees.

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Governor of the Bank of Israel Professor Amir Yaron said that Israel would spend 90 billion shekels ($25 billion) to battle the corona crisis "in a short-term scenario," or 130 billion shekels "in a longer-term scenario."

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"Without health, there is no economy, but without an economy, there will be no health."

Yaron went on to explain that the extent of the economic blow would depend on government policies.

"I am in daily contact with the prime minister. Right now, the ball is in the Knesset's hands, and I am calling on the MKs to rise above political considerations," the governor said.

"This is the time to support businesses. To enable businesses to recover once the restrictions are lifted, we have to help the people who have been hurt and the ones who have been laid off," he added.

For now, the Bank of Israel has not lowered the interest rate, unlike many other countries, but on Tuesday Yaron said: "If things get worse in the financial markets, the Bank of Israel has additional monetary tools that it will not hesitate to employ." 

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