From a macroeconomic perspective, 2025 was a complex year for the Israeli economy. Despite a prolonged war and lingering uncertainty, data indicate that the economy remained resilient and continued to grow. As one financial year ended and 2026 began, the hard numbers tell the story of what has been and what may lie ahead.
Growth in 2025 stood at just above 3% – roughly double the rate recorded in Europe last year. Looking ahead to 2026, forecasts are even more optimistic. According to the Bank of Israel, growth is expected to reach 4.7%, with inflation projected to remain lower within the 1%-3% range. Compared with Europe and even the United States, these figures are strong and are expected to provide further momentum for Israel’s continued economic expansion, both domestically and globally.
The Tel Aviv Stock Exchange also posted an impressive performance: over the past year, the TA-125 index surged by approximately 51%. Israel currently ranks 25th worldwide in terms of GDP, which stands at roughly NIS 2 trillion. Even more striking, GDP per capita is about $64,000 per year, placing Israel 13th globally, an impressive achievement given that the country does not benefit from the vast natural resources enjoyed by many other wealthy nations.
Israel’s economic strength is rooted in the creativity of its people, its export-driven orientation, and its advanced technological capabilities. Alongside the encouraging figures, however, a comprehensive assessment must also account for domestic challenges. Internal political tensions and instability in the Middle East have become almost routine, yet they can still affect a country’s economic outlook.
At the same time, Israel’s economic pillars continue to generate growth opportunities: a robust and thriving technology sector, billions of dollars in investment flowing into Israeli companies, and a highly developed services industry. Expectations of further interest rate cuts over the next two years are also fueling investor appetite, as lower rates enable more affordable leverage. In recent years, Israel has also emerged as a key supplier of defense systems and advanced technologies to European countries, particularly Germany.
Multibillion-dollar agreements are signed annually with nations that recognize Israel’s technological edge. Nor should the potential inherent in expanding the Abraham Accords and strengthening the moderate axis in the Middle East – and in Africa – be overlooked. Only recently, Israel signed a multibillion-dollar agreement to export natural gas to Egypt. Without question, 2025 was a solid year for the Israeli economy. The coming year, however, appears poised to be no less successful. Investing in Israel at this time is not only a sound economic decision, it is also a powerful expression of Zionist commitment.
Written in collaboration with Mizrahi Tefahot