The Bank of Israel on Monday sought to assuage fears of a devastating impact on the economy by the coronavirus, saying it expects the outbreak to cause a loss of 0.7 percent to Israel’s growth. This would mean GDP growth in 2020 of some 2%.

The bank’s governor, Amir Yaron, said the bank expects the crisis to subside by the close of the second quarter at the end of June. If the spread of the virus is halted, the bank expects Israel’s GDP to quickly rebound.

The assessment assumes there will not be a massive outbreak in Israel, but that some 150,000 Israelis will be confined to quarantine and that tourism, aviation, and some other activities will be mostly shut down.

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Yaron held a special meeting Monday to discuss the crisis with the CEOs of seven leading Israeli banks. The discussion centered on how the banking system could help the economy and businesses cope with the outbreak.

Israel’s banking system has not been hit hard by the crisis and is prepared for further downturn, Yaron said, commending the banks’ response thus far.

“The banking system is strong, and it is essential that the banks know how to find a balance between responsible credit policy and the financing needs of the economy, particularly in relation to the business sector, with an emphasis on small and mid-sized businesses,” Yaron said.

The bank appointed a team to address the crisis headed by its deputy governor, Andrew Abir, which will coordinate with other government authorities.

The Bank of Israel said it would also form a team including representatives from all of the country’s banks, which would aid their customers if the situation worsens.

The Bank of Israel’s Banking Supervision Department has stepped up its supervision and monitoring of each bank, and the system as a whole.

Yaron emphasized that the organization has tools at its disposal to address damage to the economy, financial sector and banking system.

The bank noted “tremendous uncertainty” regarding the outbreak, due to its unknown duration, future intensity, and coming preventative measures in Israel and abroad.

Yaron gave no indication that the bank would cut interest rates, but recommended that banks make credit more available. Israel’s banks have some NIS 14 billion (some $4 billion) in surplus capital, he said.

“If each bank and the other banks in the system ease their credit policy even slightly, it will help in overcoming the cash flow difficulties that may weigh down on healthy economic activity, and the economy will weather the intermediate period,” Yaron said.

Last week, the US Federal Reserve slashed interest rates in a dramatic move meant to buoy markets after a historic decline in US equities.

Israel’s current interest rate stands at 0.25 percent. The bank is scheduled to make the next rate announcement on July 1, but could cut rates before then. The Bank of Israel last changed its lending rate in November 2018, but has been known to follow the Fed’s lead.

Prime Minister Benjamin Netanyahu said at a Sunday cabinet meeting that the government would provide NIS 4 billion to assist businesses hit by the virus crisis, but no further actions have been taken and it is not clear where the funding would come from.

The coronavirus has rocked global markets in recent weeks, including causing a steep drop in Israeli equities.

The Tel Aviv Stock Exchange plummeted Monday, with the TA-35 index falling 6.53%, bringing its year-to-date losses to 20.66%.

The market’s opening was delayed by a so-called circuit breaker mechanism that automatically halts trading for 30 minutes if the lead index sees moves of 8%. It was the first time the circuit breaker was triggered since November 2008.

Virus panic and an oil price war also bludgeoned international markets on Monday.

A circuit breaker halted trading on Wall Street when the S&P 500 dropped 7% at opening. The index was down 6.15% by the early afternoon, and has fallen over 16% in the past month after hitting a record high in mid-February.

Hong Kong’s Hang Seng index fell 4.23%, Jappan’s Nikkei 5.07%, London’s FTSE 100 6.28% and Germany’s DAX 7.17%.

Compounding fears of the spreading virus was an oil price war between leading producers Saudi Arabia and Russia.

Last week, Saudi Arabia called on OPEC countries to cut back on production to counter plunging demand as the virus constricts international trade and travel. Russia, the world’s second largest producer, refused.

In retaliation, Saudi Arabia slashed its prices and vowed to step up production in a move aimed at holding onto its market share and pushing out its competitor.

The price cut sent markets into chaos, with the price of US crude dropping by as much as 34% at one point, causing massive losses for energy companies.