Israel GDP Growth Annualized

Israel’s economy contracted by 3.5% on an annualized basis in the second quarter of 2025, reversing from a downwardly revised 3.4% growth in the previous quarter, according to preliminary estimates. This marked the first economic contraction since Q4 2023, largely driven by a 12-day war between Israel and Iran in mid-June, which significantly disrupted economic activity. All major components of GDP declined: private consumption fell by 4.1%, government spending by 1%, and fixed capital formation by 12.3%. On the external front, exports and imports dropped by 12% and 3.5%, respectively. On a quarterly basis, the Israeli economy shrank 0.9% in Q2 2025. In July, the Bank of Israel revised its 2025 GDP growth forecast downward to 3.3%, from 3.5% in its April projection.