Israel GDP Growth Slows in Q4

Israel’s economy expanded at an annualized rate of 4.0% in Q4 2025, slowing sharply from an upwardly revised 12.7% growth in Q3, according to first estimates. The slowdown was driven by weaker domestic demand, with private consumption falling 3.6% and fixed asset investment declining 6.4%. Business GDP rose 7.1%, partially offsetting the weakness, while public consumption edged up 1.7%. On the external side, exports of goods and services, excluding start-ups and diamonds, surged 25.6%, while imports fell 3.9%, excluding defense imports, ships, aircraft, and diamonds. For the whole year, Israel’s economy expanded 3.1%.

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.