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- October 13, 202618°
- BIST10012,151-0.94%
- USD49.220.00%
- EUR55.21+0.28%
- GOLD4,186.00-0.11%
- INTEREST37.00%-1.00
- BITCOIN81,354-0.49%
- October 13, 202618°
Israeli economy contracts 3.8% in first quarter due to Iran war
According to data from the Israeli Central Bureau of Statistics, the economy contracted by 3.8% in the first quarter of the year. Moody's and the IMF also lowered their growth forecasts.
The Israeli Central Bureau of Statistics announced that the economy contracted by 3.8% year-on-year in the first quarter of 2026. This figure, the bureau's third estimate, was unchanged from the previous month.
The contraction was driven by declines in consumer spending, public expenditure, and exports. In contrast, fixed asset investments rose by 12.6%, while investments in high-tech sectors surged by 61.6%.
Gross domestic product per capita fell by 4.5% compared to the same quarter of 2025.
Meanwhile, economic growth is expected to recover in the second quarter of the year. The Bank of Israel forecasts the economy will grow by 4% overall in 2026.
International credit rating agency Moody's yesterday lowered its 2026 growth forecast for Israel from 5% to 3.7% in a report. The agency highlighted rising geopolitical risks and the fragility of ceasefire agreements with Iran, Hezbollah, and Hamas.
Moody's kept Israel's credit rating at 'Baa1' with a 'stable' outlook. The report stated that the fragile security environment continues to pose risks to the economic and fiscal outlook. It noted that if the ceasefires hold, the economy could recover after the weak performance in the first quarter.
The International Monetary Fund (IMF) had also cut its 2026 growth forecast for the Israeli economy from 4.8% to 3.5% in early July. The IMF stressed that the wars in Iran, Lebanon, and Gaza were suppressing economic activity and increasing risks to the growth outlook.
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