Bank of Israel Raises Growth Forecasts Significantly Despite War
Translated & summarized from Now 14 by baba
The Bank of Israel has significantly boosted its economic growth forecasts, projecting 5.6% growth this year and 7.5% next, despite the ongoing war. Governor Amir Yaron noted that overseas production by Israeli firms heavily influences the figures, while domestic growth is projected at 3.4% and 5.1% respectively. The forecast assumes reduced conflict intensity and faces risks from the security situation and economic uncertainties.
The story in 6 lines · by baba
- Bank of Israel forecasts 5.6% growth this year and 7.5% next, up from previous estimates.
- Overseas production by Israeli firms is a major factor in the revised growth forecast.
- Domestic economic growth is projected at 3.4% this year and 5.1% in 2025.
- The forecast assumes a decrease in the intensity of the ongoing conflict.
- Israel is expected to lead OECD countries in growth in 2026, according to the IMF.
- Security situation and economic uncertainties are identified as key risks.
Despite the ongoing war, the Bank of Israel has significantly raised its economic growth forecasts for the current year and next. The research division's updated projection anticipates the economy will grow by 5.6% this year and 7.5% in 2025. This marks a substantial increase from the previous forecast in July, which predicted 4% growth for this year and 5.5% for next.
Governor Amir Yaron explained that a considerable portion of this upward revision is attributed to production by Israeli companies abroad. While this activity contributes to state tax revenues, it does not necessarily rely on local labor or capital, and most profits do not directly benefit Israeli households. Therefore, this rapid growth might present an overly optimistic picture of the domestic economy.
To provide a clearer view of the local economy, the Bank of Israel also released a forecast excluding overseas production. This adjusted projection estimates growth of 3.4% for this year and 5.1% for next. These figures still represent robust growth, though lower than the overall numbers.
The forecast is contingent on the assumption that the intensity of the fighting will remain low and does not account for economic measures by a future government. Governor Yaron highlighted potential risks, including the security situation, uncertainty regarding state revenues and expenditures, the defense budget's scope, and developments in technology and artificial intelligence.
This revised forecast aligns with the International Monetary Fund's projection, which anticipates Israel will lead OECD countries in economic growth in 2026 with a 4.5% GDP increase, surpassing Denmark and Poland. This outlook is particularly noteworthy given the war and the significant security and economic challenges facing Israel.
The same event, reported separately by each outlet. Open a few to compare what different newsrooms emphasize — and what they leave out.
Right 1Haredi 1
Not the same event — other stories that share this one’s people, places, or theme: background, reactions, and follow-ups.
