Updated data shows Operation 'Roar of the Lion' hurt the economy more than first thought

The Central Bureau of Statistics said on Tuesday that the economic damage from the March fighting against Iran was worse than initially estimated. Its revised figure puts the loss at 3.8% of GDP in the first quarter, up from 3.3% in the first release last month. The first estimate had already been criticized as too optimistic, and the new data is now seen as a more accurate reflection of the effects of a prolonged war, according to the report.

The revision shows that the slowdown was felt directly by households and businesses. GDP per capita was updated to a 5.0% decline, compared with an earlier estimate of 4.5%. Business-sector output fell 3.8% instead of 3.1%, as closed shops, empty restaurants, and disrupted services took a heavier toll than first recorded. Private consumption per capita was revised to a 6.1% drop from 5.8%, reflecting lower spending, fewer outings, military reserve duty, uncertainty, and business closures.

Exports were also hit much harder than previously believed. The bureau cut its estimate for export growth sharply, from 5.6% to just 1.9% in the first quarter, saying the stronger shekel against foreign currencies also limited growth. The updated data lines up more closely with recent international forecasts, including the OECD, which now expects Israel to grow only 3.3% in 2026.

The article says the stakes go beyond statistics because slower growth affects the state budget deficit, which is calculated as a share of GDP. If growth falls short of expectations, the deficit rises and the government may face pressure to cut services or raise revenue later, including through tax increases next year. That stands in contrast to the Finance Ministry’s chief economist, who recently raised his annual growth forecast to 4%, while the Bank of Israel projected 3.8%.