IMF Raises Israel's 2026 Growth Forecast to 4.5%, Predicts Inflation Drop

Translated & summarized from 0404 by baba

RightNeutral tone

Hebrew · 9 newsrooms covering

The International Monetary Fund has raised Israel's 2026 economic growth forecast to 4.5% and predicts inflation will fall to 1.8% that year. These projections were part of the IMF's "World Economic Outlook" report released Tuesday. The IMF also forecasts modest unemployment increases and a shrinking current account surplus for Israel. Globally, the IMF slightly increased its 2026 growth outlook but warned about high public debt and rising financing costs.

The story in 6 lines · by baba

The IMF raised Israel's 2026 growth forecast to 4.5% from 3.5%, with 2027 growth projected at 4.4%.
Israeli inflation is expected to drop to 1.8% in 2026, within the Bank of Israel's target range.
The IMF's revised forecast for Israel is more optimistic than its own projections for the Middle East and North Africa region.
The unemployment rate in Israel is projected to rise slightly from 3% in 2025 to 3.2% in 2027.
The current account surplus in Israel is expected to decrease from 2.1% of GDP in 2025 to 1.1% in 2027.
Globally, the IMF predicts 3.1% growth in 2026, with inflation rising to 4.7% this year.

IMF Raises Israel's 2026 Growth Forecast to 4.5%, Predicts Inflation Drop — Editorial illustration generated by baba News, not a photograph of the event.

The International Monetary Fund (IMF) has increased its growth forecast for the Israeli economy in 2026 to 4.5%, a full percentage point higher than its previous projection of 3.5%. The forecast for 2027 remains unchanged at 4.4%. These updated figures were released Tuesday in the IMF's "World Economic Outlook" report, coinciding with the start of the annual meetings of the IMF and World Bank in Bangkok, Thailand.

The upward revision for Israel stands out, especially as the IMF lowered its forecasts for the Middle East and North Africa region, partly due to the prolonged closure of the Strait of Hormuz and energy market volatility. The IMF projects the Israeli economy grew by 3.5% in 2025.

On the inflation front, the IMF anticipates a positive trend for Israel. After reaching 3% in 2025, inflation is expected to fall to 1.8% in 2026, within the Bank of Israel's target range, and then rise slightly to 2% in 2027. The unemployment rate, at 3% in 2025, is projected to increase modestly to 3.1% this year and 3.2% next year. The current account surplus is expected to gradually decrease from 2.1% of GDP in 2025 to 1.7% this year and 1.1% in 2027.

Compared to the Bank of Israel's July forecasts, which predicted 4% growth in 2026 and 5.5% in 2027, the IMF is more optimistic for the current year but more cautious for the next. Cumulatively for both years, the IMF forecasts about 9.1% growth, versus approximately 9.7% according to the Bank of Israel.

Globally, the IMF slightly raised its 2026 growth forecast to 3.1% from 3% in July, indicating a slowdown from the 3.5% growth expected in 2025. Global growth is projected at 3.4% in 2027. The IMF attributes this to AI investment and fiscal support offsetting energy price hikes. Global inflation is expected to rise to 4.7% this year due to energy and food prices, before falling to 4.1% in 2027. The IMF warned that high public debt levels and rising financing costs in developed economies limit governments' ability to respond to further shocks, suggesting the global economy's resilience may be nearing its limits. These forecasts assume an average oil price of around $95.70 per barrel this year and $87.40 next year. In Israel, the September consumer price index will be released on Thursday, and the Bank of Israel is expected to announce its next interest rate decision next week.