IMF Raises Israel's 2026 Growth Forecast to 4.5%, Cites AI and Energy Independence
Translated & summarized from Calcalist by baba
The International Monetary Fund (IMF) has raised Israel's 2026 growth forecast to 4.5%, an increase from its previous 3.5% projection. This figure is higher than the IMF's global growth forecast but lower than Israel's own central bank's predictions. The IMF also anticipates a decrease in Israel's 2026 inflation to 1.8%, while global inflation is expected to rise. The report highlights that a smaller number of economies are driving global growth, with Israel being among them due to its AI connections and reduced energy shock exposure.
The story in 5 lines · by baba
- IMF raised Israel's 2026 growth forecast to 4.5%, a significant increase from 3.5%.
- Israel's 2026 growth forecast from IMF is higher than global projections but below Bank of Israel's.
- IMF expects Israel's 2026 inflation to fall to 1.8%, contrary to global trends.
- Global growth is slowing, with a few economies like Israel driving most of the expansion.
- The IMF cited Israel's AI integration and lower energy shock exposure for its positive outlook.
The International Monetary Fund (IMF) has significantly boosted its growth forecast for Israel in 2026 to 4.5%, a full percentage point increase from its April projection of 3.5%. However, the IMF's outlook for 2027 remains unchanged at 4.4%. This upward revision for Israel contrasts with the IMF's reduced growth forecast for the broader Middle East and North Africa region in 2026, attributed to the prolonged closure of the Strait of Hormuz.
While the IMF's 2026 forecast for Israel is more optimistic than its previous outlook, it falls short of the Bank of Israel's projections. The Bank of Israel's research department anticipated 4% growth in 2026 and a more robust 5.5% in 2027. Cumulatively over the two years, the IMF's forecast for Israel is approximately 9.1%, compared to the Bank of Israel's 9.7%.
The IMF report also noted a decrease in Israel's expected inflation for 2026 to 1.8%, down from 2.3% in April. This is considered unusual as global and developed country inflation forecasts were raised. Unemployment is expected to remain stable at around 3%, but the current account surplus is projected to shrink to 1.1% of GDP, down from nearly 2% previously.
The IMF's global outlook anticipates average oil prices of $95.7 per barrel in 2026, a 16% increase from April, and assumes the Strait of Hormuz will only reopen in March 2027. Global inflation is expected to reach 4.7% in 2026 before slightly declining to 4.1% in 2027, with a 35% probability of exceeding 5% in 2027. The report also warns about fiscal policies, rising public debt in developed and emerging economies, and the importance of central bank independence.
Globally, the IMF projects a slowdown in world growth to 3.1% in 2026, with a recovery to 3.4% in 2027. However, this growth is increasingly concentrated, with 32 economies now accounting for 95% of global growth, up from 54 economies in April. The IMF identifies economies connected to the AI supply chain and less exposed to energy shocks, such as Israel, as the primary drivers of this growth.
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