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Israel's Economy Grows Nearly 10% Despite Three Years of War
Israel's economy and financial markets have demonstrated remarkable resilience over three years of war, with the country's GDP growing by nearly 10%. The Tel Aviv Stock Exchange's flagship TA-35 index surged by 130% over this period, outperforming major global indices like the S&P 500 and Nasdaq, while the TA-125 index rose by 120% according to Mignews.
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What happened
- 01Israel's GDP grew by nearly 10% over three years of war, demonstrating unexpected economic resilience.
- 02The Tel Aviv Stock Exchange's TA-35 index surged by 130% over three years, outperforming major global indices.
- 03The Bank of Israel estimated the cumulative economic cost of the war at 177 billion shekels by the end of 2025.
- 04Israel's government debt-to-GDP ratio rose to nearly 70% due to the high costs of war financing.
- 05The high-tech and defense sectors served as key growth engines, boosted by global defense spending and remote work capabilities.
- 06The Israeli shekel strengthened significantly after initial wartime depreciation, trading below its pre-war level against the dollar.
- 07The TA-Insurance index led stock market gains with a massive 490% surge over the three-year period.
This economic growth occurred despite a steep cumulative economic cost. The Bank of Israel estimated the war's cumulative output loss to reach approximately 177 billion shekels by the end of 2025, which represents 8.6% of annual GDP. Additionally, government spending to finance the war caused the national debt-to-GDP ratio to rise to nearly 70%, which in turn pushed government bond yields higher.
Analysts attribute this performance to the economy's learned ability to recover from security shocks, a strong pre-war debt ratio, and the continuous operation of the high-tech sector through remote work. The defense and cybersecurity industries also received a boost from increased domestic demand and global defense spending. While the insurance and banking sectors led stock market gains, with the TA-Insurance index surging 490%, the real estate sector lagged.
In the currency markets, the Israeli shekel recovered from its initial wartime depreciation to trade below its pre-war level against the dollar. This stabilization was heavily supported by improved market sentiment and active intervention by institutional investors, who also helped strengthen the corporate bond market.
Summarized by baba from the reports of 3 newsrooms. Updated
Latest report: Mignews. Read Mignews’s originalThe coverage
3 newsrooms on this story
Who covered it
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