A man sprays water to clean chairs and a street, as Israel imposes a third national lockdown to fight climbing coronavirus disease (COVID-19) infections, in Tel Aviv, Israel, Dec. 27, 2020. Photo: Reuters / Amir Cohen.

Israel’s economy is likely to grow by 4.6 percent this year, the Finance Ministry said on Sunday in a forecast reliant on continuation of rapid COVID-19 inoculations and a drop in the infection rate.

In a lower probability scenario in which the health environment deteriorates because of new virus mutations or vaccinations taking longer than expected, forcing further lockdowns, the economy would grow by only 1.9 percent, the ministry said, adding that its projection for 2020 is a contraction of 3.3 percent.

Israel has been a world leader in vaccinating its population against the coronavirus.

“The economy will recover at the rate that had characterized the sub-prime (2008 financial) crisis,” the ministry said of its main scenario, assuming “vaccination of the population in the first half of 2021 when, in this period, there are still limited health restrictions.”

The Bank of Israel has estimated a contraction of 3.7 percent for 2020 and growth of 6.3 percent in 2021 if the rapid vaccination pace is maintained. That would fall to 3.5 percent growth in a slow-inoculation scenario.

According to the ministry, Israel’s economy fared relatively well in 2020 and outperformed an OECD average of a 5.5 percent contraction. It cited minor damage to exports thanks to high-tech exports.

It noted, however, that unemployment remained high at 15.4 percent in 2020 and is expected to fall to 8.6 percent in 2021 in its base scenario and to 11.6 percent in a more pessimistic projection, with a decline in the average wage in either case.

Separately, the Central Bureau of Statistics said the economy surged 39.7 percent in the third quarter of 2020 on an annual basis compared with the second quarter, reflecting an economy that was mostly open during the summer between lockdowns.

Growth in the July-September period was driven by sharp gains in exports (59.7 percent), private spending (42.3 percent) and investment in fixed assets (17.2 percent).