The unemployment rate in Israel has crossed 20 percent and economic activity levels have been low for three months. The return to activity is also far from bringing the economy back to its former level. This situation is defined as a recession. So far, this is the worst recession in terms of quantity and volume of those Israel has known.

Recessions are usually caused by a sharp decline in demand in the product markets. The current recession is somewhat reminiscent of Israel's recession in 2004-2001, during the second intifada. Then there was a fall in tourism, a decline in consumption of Israelis who were afraid to go shopping, a sharp decline in investment due to the increase in uncertainty, and even a decline in exports due to a slight global recession that occurred in those years, due to the fall of dot-com shares.

This time, all these signs appear, but with increased intensity. Tourism has completely disappeared. Israelis are worried about going to the malls for fear of being infected. Investments have fallen (no data from Israel yet, but US data indicate a sharp fall in the field) and exports are also small due to a global recession, this time very strong.

This recession is special not only because of the fall in demand, but it also involves a decrease in supply, due to the fact that many businesses do not work, or work in reduced volume. Further down the road, more and more businesses will be back in business, but demand will continue to be low and it will take a long time, possibly even years, to recover. Even if he recovers in the country, he would be late to recover from overseas, so the global recession will also affect Israel.

And here, precisely in this period, when the economy sunk deep recession, the government wants to make a step in the annexation of large areas of settlements and land in the Jordan Valley, thus risking that is to deepen and extend the recession even more. I would appreciate really, I think annexation is a bad move to Israel politically, that is blocking any future progress of peace with our neighbors. but as an economist, amazes me why the government indifferent to the impact of its actions on the Israeli economy.

exacerbations of Israel with The Palestinians have always caused significant recessions. This is what happened in the recession caused by the second intifada I described above, but so was the recession in 1989, after the outbreak of the first intifada, and Israel was rescued from it only because of the increased wave of immigration from the former USSR. In 1996, after Rabin's assassination, the Oslo process and the security situation deteriorated. Following that, the economy suffered another recession in 1999-1997. Israel's economic history teaches us that flare-ups with Palestinians create recessions.

And today, precisely when the Israeli economy is in the midst of a deep recession, the government initiates annexation. This is a step that will provoke a furious Palestinian response that, while it is not predictive of its magnitude, it is clear that it will greatly deepen the current recession and may extend it considerably. Does the government prefer the interests of the settlers to the interests of almost a million unemployed Israelis? 

Joseph Zeira is professor (emeritus) of economics at the Hebrew University of Jerusalem, author of "The Economy of Israel"