Learning from Israel’s success - Capital Economics
Emerging Markets Economics

Learning from Israel’s success

Emerging Markets Economics Update
Written by William Jackson

Israel’s rapid vaccination programme has allowed the government to set out plans to re-open the domestic economy in the coming weeks and may offer some lessons for other countries. The speed at which the restrictions will be lifted is the most striking aspect of the plans. But it’s also notable that those who have been vaccinated will be given more freedoms than those who haven’t, while international travel restrictions look set to stay in place. The next few weeks will be the acid test to see whether vaccinating the most vulnerable can allow restrictions to be eased without renewed strains in health systems.

  • Israel’s rapid vaccination programme has allowed the government to set out plans to re-open the domestic economy in the coming weeks and may offer some lessons for other countries. The speed at which the restrictions will be lifted is the most striking aspect of the plans. But it’s also notable that those who have been vaccinated will be given more freedoms than those who haven’t, while international travel restrictions look set to stay in place. The next few weeks will be the acid test to see whether vaccinating the most vulnerable can allow restrictions to be eased without renewed strains in health systems.
  • So far, Israel is the world leader in the vaccination race. Almost half of its population has received at least one vaccine dose and 30% are fully vaccinated with two doses. (See Chart 1.) Encouragingly, there is also growing evidence that vaccinations are helping to reduce COVID-19 cases, hospitalisations and deaths. And the government is starting to re-open the economy. Israel’s success throws up five important questions.
  • Why has Israel’s vaccination campaign been so successful? A range of features seems to underpin the rapid rollout. First and foremost, it secured good access to vaccines from Pfizer/BioNTech, helped by the promise that it would share data on the jab’s effectiveness. Otherwise, it seems widely agreed that Israel’s vaccination drive has benefitted from: a small land mass and population; a centralised system of government; an accurate and well-maintained register of its population; and liberal guidelines about who gets vaccinated first. Notably, many of those features are shared by the UAE, another global vaccine leader.
  • Finally, there’s been strong political willingness to push the vaccine drive. The roll-out of vaccines and the prospect of an end to the pandemic form an important part of Prime Minister Benjamin Netanyahu’s campaign ahead of the general election next month.
  • What’s the plan for ending the lockdown? Earlier this month, schools partially re-opened and restrictions on travel were eased. And this week, the government unveiled a plan to re-open the economy further. This will occur in two stages, with the first starting on Sunday and the next in early March. Overall, the plans point to a rapid re-opening of the economy. (See Table 1 for full details.)
  • An important feature of Israel’s re-opening is that restrictions will be loosened further for those who have been vaccinated. Entry to things like sporting and cultural events, gyms and swimming pools, hotels and restaurants will be restricted to individuals with a ‘green badge’, a document that confirms that the individual has received two vaccine doses or has recovered from COVID-19. (This also appears to be aimed at incentivising vaccination among people reluctant to get a jab – more on this below.)
  • One caveat is that international travel will remain highly restricted for the time being. The government is moving cautiously on this front amid concerns of importing new virus variants. It has understandings with Greece and Cyprus to resume tourism travel, with the ‘hope’ of a broader re-opening in the middle of the year. (For more on the implications of prolonged travel restrictions, see our Global Economics Update.)
  • What prompted the move to end the lockdown? Israel’s government didn’t set quantitative criteria for lifting its lockdown, but a few factors appear to lie behind the move to ease restrictions. The first is that a high share (around 80%) of those over the age of 70 have now been fully vaccinated (i.e. they have received two vaccine doses). (See Chart 2.)
  • That, combined with the green badge system (mentioned above), seems to have given the government confidence that it can ease the lockdown without risking a sharp increase in serious illnesses. It is notable that Israel was actually tightening its lockdown when a large share of the elderly had only received their first dose. (Similarly, in the UAE, where many have received their first dose but few their second, the government has recently been tightening lockdown measures.)
  • The second, and related, factor is that there is strong evidence to suggest that the vaccines have been highly effective in reducing illness. Over the last few days, preliminary findings were released from a study of those vaccinated in Israel which reported that the Pfizer/BioNTech vaccine has 94% efficacy after two doses, confirming the high levels of efficacy reported in the vaccine’s phase III trial. That’s matched by a decline in hospitalisations for COVID-19, particularly among the elderly. (See Chart 3.)
  • Finally, it’s worth noting that domestic politics has also influenced these decisions. The plans reflect compromises reached between officials at the health ministry – which had wanted to extend lockdowns – and parts of the ruling coalition that had wanted to remove restrictions more quickly.
  • What challenges does Israel now face? Vaccine hesitancy appears to be a growing challenge now, particularly among the young, the Israeli Arab community and some members of the orthodox Jewish community. That may lie behind the slowdown in the pace of vaccinations in recent weeks. For the government, the main concern appears to be the remaining people over 50 who have yet to be vaccinated (approximately 10-20% of the population aged 70 and over and 30-40% of the population aged 50-69).
  • What lessons does Israel hold for the rest of the world? In many ways, Israel is a unique case – its vaccine supply is particularly good and its health system efficient. That has allowed a very rapid rollout of vaccines and the country is far ahead of the pack when it comes to fully vaccinating its population. (See Chart 4.)
  • What’s more, the decision by Israel’s government to adopt a two-tier system (the green badge) to re-open its economy may not be replicable elsewhere due to public resistance, particularly if i) anti-vaccination sentiment is high and/or ii) they are introduced when vaccines are not yet available to all.
  • Further lessons from Israel’s experience will become clear over the coming weeks but there are perhaps two takeaways at this stage. The first is that, even if governments move to open their domestic economies quickly, they’re likely to be much more cautious about re-opening to international travel. The second is that the next few weeks will be the acid test. If Israel lifts its lockdown without renewed strains in the health system, that will offer hope that lockdowns might be lifted quickly elsewhere. However, if hospitalisations rise back up again, others will surely take this as a cue to act even more cautiously.

Chart 1: Israeli Population that Has Received Vaccine
(% of Total)

Chart 2: Vaccination of Population Aged 70+
(% of Total Population Aged 70+)

Chart 3: Hospitalisations with COVID-19 & Average Age of Those Hospitalised

Chart 4: Total Population that is Fully Vaccinated
(Two Vaccine Doses, % of Total)

Sources: Refinitiv, data.gov.il, Capital Economics

Table 1: Israel’s Lockdown & Re-Opening

Date

Policies

27th Dec.
(3rd Lockdown)

Restrictions on going more than 1km from home.

Public and commercial places closed, except for essential goods and services.

Hotels, cultural and entertainment venues closed.

7th Jan.
(Lockdown Tightened)

Public transport occupancy limited to 50%.

Employees (except essential workers and those involved in infrastructure) cannot go to place of work.

Schools closed.

Gatherings restricted to up to 5 people (indoors) and 10 (outdoors).

Restrictions on international travel.

7th Feb.
(Lockdown Lifted –
1st stage)

Restrictions on travel from home lifted.

Some cultural sites (e.g. nature reserves) open.

Some children allowed to return to school (grades 1-4).

21st Feb.
(Lockdown Lifted –
2nd Stage)

Grades 5, 6, 11 & 12 can return to school.

Shopping malls, streets stalls, outside shopping centres, museums and libraries can open, subject to social distancing measures.

Restrictions on gatherings loosened to 10 (indoors) and 20 (outdoors).

With a green badge: access to gyms, cultural and sports events, hotels and swimming pools permitted.

7th March
(Lockdown Lifted –
3rd Stage)

Grades 7-10 allowed to return to school (i.e. schools fully open).

Cafes and small restaurants can re-open.

Restrictions on gatherings loosened to 20 (indoors) and 50 (outdoors).

With a green badge: can visit restaurants, hotels, events, attractions and conferences.

Source: Israeli government


William Jackson, Chief Emerging Markets Economist, william.jackson@capitaleconomics.com