Israel's Net Credit to Foreign Economies Surges to $350 Billion Amid War

Israel's net credit to foreign economies has dramatically increased to approximately $350 billion since the outbreak of the war, representing a 46% rise and an additional $109.75 billion. This figure, representing net loans in debt instruments, stands at about 50.5% of Israel's GDP. Israel now ranks fourth globally in net credit provision relative to its GDP, trailing Norway, Switzerland, and Japan.

Norway's lending capacity stems from oil and gas revenues, while Switzerland's is driven by high household savings. Japan's lending, historically fueled by low interest rates, is undergoing changes due to an aging population and a shift away from negative interest policies. Israel's surprising financial strength is primarily attributed to its leading high-tech and cyber industries, significant foreign direct investment (FDI), and substantial foreign exchange reserves held by the Bank of Israel.

Despite the ongoing conflict, FDI in Israel has surged by nearly 38% since October 7, 2023, reaching $329.6 billion by the second quarter of 2026, up from $239.2 billion pre-war. In the first half of 2026, FDI reached $30.1 billion, a more than 190% increase compared to the same period in 2025, indicating a strong return of investor confidence. Major tech companies like Intel, Microsoft, Nvidia, and Google continue to expand their research and development centers in Israel, with the cyber sector being a particular draw due to global security challenges.

While Israel's trade surplus in goods and services, particularly in high-tech services and defense exports, remains strong, the overall current account balance has seen a deficit. This is largely due to multinational corporations recording profits in Israel or distributing dividends and interest payments to foreign shareholders, leading to a $1.35 billion deficit in the first half of 2026, contrasting with a $6.6 billion surplus in the first half of 2025.

The strength of the Israeli economy is also reflected in the shekel's appreciation against most global currencies over the past year, even after a slight depreciation during the Sukkot holiday. This strong shekel has made imports cheaper and facilitated outbound travel for Israelis, leading to significant congestion at Ben Gurion Airport.