"The difficulties that parts of the business sector are still facing may lead to an increase in bankruptcies," the Bank of Israel warned in the "Financial Stability Report" for the first half of the year.
"Although there has been a recovery in economic activity, the employment rate is still 4.5 percentage points lower than in 2019," the report said. "Of an increase in bankruptcies in all the economies whose activities have been affected by the corona as the support measures in the various countries decrease."
In particular, the European Central Bank warns of an uneven recovery of the business sector, as the situation of small and medium-sized businesses is more difficult than the situation of others.
In Israel, most businesses are small and tiny businesses (up to 20 workers), employing 40% of the employed in the economy.
Like the rest of the world, small businesses have also been hit harder than others in the health crisis.
The main health restrictions that remain are on the entry of tourists.
Many countries around the world still have high morbidity rates, and immunization rates are rising slowly.
"It seems, therefore, that foreign tourism will continue to be negligible," the bank clarified.
"Domestic tourism at this stage is not enough to compensate the hospitality industry for the lack of foreign tourism. At the end of June, purchases in the restaurant industry were about 30% lower than the expected trend."
The report also states that the government deficit decreased during the first half of the year and reached 10.5% as of May (since then the deficit fell to a single-digit rate of 9.3%), but on the other hand fiscal (budgetary) policy remained broad, alongside broad monetary policy. Which continued to operate additional tools and in particular the purchase of government bonds.
In mortgages, the demand for which increased at the beginning of the year, the weighted cost of credit decreased slightly.
Developments in asset prices indicate a medium-high level of risk: stock prices rose in the first half of the year, and various indications "indicate an increase in investors' appetite for risk."
In the construction industry, there was a decline in investment in 2020 and the first quarter of 2021, which to some extent hurt the supply of apartments, an effect that will continue in the medium term.
"The demand for the purchase of an apartment and the increase in the proportion of investors - against the background of a reduction in the tax on investors and favorable financing conditions - are reflected in a rise in prices."