Israel's economy shrinks in first quarter but seen rebounding after Iran war
Private consumption fell 4.7% and civilian public purchases dropped 43.5%, while defense spending rose 9% on the war, the Central Bureau of Statistics said.
- The Central Bureau reported that Israel GDP contracted by an annualized 3.3% in the first quarter of 2026, performing better than the 4% drop forecast by economists.
- Growth slowed after Israel launched strikes against Iran on February 28, resulting in weeks of ballistic missile fire that closed schools and dampened consumer and business activity.
- Public consumption spending contracted 4.8% while private consumption fell 4.7%, yet defense consumption spending increased 9% year-on-year due to the war.
- The contraction significantly impacted the standard of living, with GDP per capita declining 4.5% on an annualized basis compared to the last quarter of 2025.
- Ofer Klein, head of economics and research at Harel Insurance, expects a relatively quick return to positive growth, citing improvement in economic activity since restrictions lifted in April.
15 Articles
15 Articles
Israeli economy contracts amid war with Iran but expected to bounce back
Israel’s gross domestic product shrank at an annualized rate of 3.3% in the first quarter of 2026, according to an initial assessment published by the Central Bureau of Statistics on Sunday.The contraction of the economy is registered on the backdrop of the war with Iran, and is less severe than a forecast by analysts in the Finance Ministry who anticipated a 9.5% drop in GDP, financial outlet TheMarker reported.The contraction was also lower th…
The Israeli economy contracted significantly in the first quarter of this year as a result of the war in the Middle East. This is according to figures published on Sunday by the Israeli statistical office.
Israel’s economy suffered a sharp slowdown in the beginning of 2026. According to the latest official data from the Central Bureau of Statistics, the gross domestic product (GDP) contracted at an annual rate of 3.3% during the first quarter of the year, compared to the previous quarter. The data indicates a significant change in trend following the growth of 2.9% in the last tranche of 2025 and a positive performance throughout that year. The fa…
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