Israeli Goods Exports Increasingly Bypass Homeland

Approximately 40% of Israeli goods exports, valued at $11.2 billion in the second quarter of 2026, are now being sold abroad without physically passing through Israel. This phenomenon, known as "Israeli production abroad," involves companies owned by Israelis manufacturing goods in other countries and selling them directly to international customers. These goods do not enter or leave Israel, thus bypassing traditional Israeli customs records.

This trend has significantly accelerated since the latter half of 2023, when such exports constituted only about 9% of the total. The increase has been substantial in the years since. Companies across various sectors, including defense, pharmaceuticals, and electronics, are involved.

Several factors are contributing to this shift, including the strength of the Israeli shekel, rising production costs within Israel, and a strategic desire to be closer to foreign markets. CTech suggests this trend partially explains the disconnect between strong export figures and their limited impact on the domestic economy, as production within Israel generates more local jobs, wages, and economic activity.

An independent analysis by CTech indicated that while the Israeli economy grew by 3.2% in the first half of 2026 compared to the second half of 2025, this growth shrinks to approximately 1% when excluding the output of Israeli companies operating abroad.