Israeli Economy Shows Resilience Amid War, Credit Due to Finance Minister Smotrich
Despite initial dire forecasts predicting economic collapse under Finance Minister Bezalel Smotrich’s leadership during Israel’s ongoing war, the economy has demonstrated notable resilience. Prior to his appointment, experts warned of soaring unemployment, investment flight, budget paralysis, and loss of market confidence. While some concerns were grounded in professional analysis, much public discourse prematurely blamed Smotrich for any negative outcomes.
The government faced unprecedented challenges including prolonged conflict, massive defense spending, hundreds of thousands of reservists called up, economic sector disruptions, and severe budgetary pressures. Economists both in Israel and internationally anticipated a sharp economic slowdown and potential long-term damage to Israel’s economic strength. However, despite increased deficits and economic costs, the labor market remained robust, the financial system stable, and key growth engines continued operating, surprising global institutions.
The International Monetary Fund forecasts 3.5% growth for Israel in 2026, and the Bank of Israel expects renewed economic acceleration once security stabilizes. The OECD also highlights the economy’s strong fundamentals and anticipates growth strengthening post-conflict. While acknowledging that economic success is not solely due to the finance minister, the article argues it is unfair to attribute all failures to him while crediting others for successes.
Smotrich prioritized full support for the war effort alongside preserving economic growth drivers. His budgets addressed security and recovery needs, aid for reservists and families, infrastructure, education, health, and welfare investments, while promoting business activity and economic resilience. Measures included benefits for reservists, tax bracket adjustments, taxing excess bank profits, banking competition reforms, expanded personal imports, and efforts to reduce living costs.
The government also maintained focus on long-term growth sectors like high-tech, exports, and advanced industry, emphasizing innovation and job preservation despite the crisis. Challenges remain, including high living costs and growing deficits, with calls from the Bank of Israel and international bodies for fiscal responsibility and continued reforms to maintain market trust and economic strength.
The article concludes that political debate over Smotrich’s tenure is healthy but economic evaluation must be fact-based and consistent, recognizing both difficulties and the economy’s ability to function and grow under extraordinary wartime conditions. The author, former CEO of the Israeli Consumer Council, stresses that fair judgment requires acknowledging the finance minister’s role in both setbacks and successes.
