Israel's Economy Shows Stability and Growth Amidst Global Challenges

Israel's economy remains stable and growing despite recent challenges, according to a positive assessment released by the Ministry of Finance on the eve of Rosh Hashanah. The gross domestic product (GDP) grew by 3.2% in the first half of 2026 compared to the second half of 2025.

Foreign investments surged by 78% in 2025, reaching $26 billion, with this upward trend continuing into 2026. The high-tech sector continues to lead the economy, with capital raising increasing by 53.6%. Israel is solidifying its position as a global AI powerhouse, ranking third worldwide in AI trade, sixth in development, and seventh in research among 83 countries.

Inflation has decreased from 2.5% to 1.5% over the past year. The Tel Aviv 125 stock index rose by 35%, and the shekel strengthened by 11% against the dollar. The budget deficit fell from 4.7% to 3.3%, and the debt-to-GDP ratio stands at 67.9%, significantly lower than the OECD average of 111%.

Israel's risk premium (CDS) has dropped by 29%, nearing pre-war levels, and the yield on 10-year government bonds decreased by 7.2%, reducing the state's borrowing costs. The unemployment rate remains low at 3.3%, below the OECD average of 4.9%. While labor force participation is slightly higher than the OECD average (62.5% vs. 61%), employment rates for ages 15-64 are slightly lower (71% vs. 74%).

GDP per capita, adjusted for purchasing power parity, is approximately $60,000, compared to the OECD average of about $64,000.