Israel GDP Posts Fastest Growth Since Q1 2024

Israel’s economy expanded at an annualized rate of 11.1% in Q3 2025, its fastest pace since Q1 2024, according to a third estimate. This broadly aligns with the 11% reported in the second estimate and follows a revised 4.6% contraction in Q2 after the ‘Am Kalvi’ war. The rebound was driven by robust private consumption, which jumped 21.4%, alongside a 34.5% surge in gross fixed capital formation and a 4.5% increase in government spending. On the external front, exports climbed 16.9%, contributing strongly to GDP growth, while imports rose 13.1%.

Israel’s economy expanded by 11% at an annualized rate in the third quarter of 2025, below preliminary estimates of a 12.4% growth, but recovering sharply from an upwardly revised 4.8% contraction in the second quarter caused by the Iran conflict and Gaza tensions. The latest figure marked the fastest GDP growth since the first quarter of 2024, reflecting a rapid recovery following the 12-day Iran conflict in June, which had temporarily shut down the economy due to heavy missile attacks, and easing constraints from the Gaza war, which had restrained activity as up to 300,000 civilians were called into military reserve duty. The rebound was mainly boosted by surges in private consumption (21.6%) and fixed investment (34%). Additionally, government spending grew by 4.4% and net trade added positively, with exports (16.9%) outpacing imports (13.7%). On a quarterly basis, the Israeli economy grew by 2.6% in Q3 2025.

Israel’s economy grew at an annualized rate of 12.4% in Q3 of 2025,recovering sharply from an upwardly revised 4.3% contraction in the previous quarter, preliminary estimates showed. It marked the fastest GDP growth since the first quarter of 2024, mainly boosted by surges in private consumption (23%), fixed investment (36.9%), and exports (23.3%). Meanwhile, government spending grew by 4.4%. “The sharp increase in GDP in the third quarter of 2025 reflects a significant rise in private consumption, exports of goods and services, and investment in fixed assets after large declines in the second quarter of the year due to the war with Iran,” the Central Bureau of Statistics said. Economic growth was 1% in 2023 and is projected to grow 2.5% in 2024, according to the Bank of Israel, whose estimate is slightly weaker than 2.8% from the Finance Ministry. But growth, held back somewhat during the two-year Gaza war, is forecast to expand around 5% in 2026.