Israel Q4 GDP Growth Slows Sharply to 3.3%

Israel's economy expanded at an annualized rate of 3.3% in Q4 2025, below previous estimates of 4.2% growth and falling sharply from a upwardly revised 12.7% in the previous quarter. Domestic demand weakened, with a 3% contraction in consumer spending and a 5.7% decline in fixed assets investments. In turn, government spending increased 1.8%, while business GDP increased 6%. On the external side, imports of goods and services, excluding defense imports, ships, aircraft and diamonds decreased 2.8% and exports of goods and services, excluding start-ups and diamonds increased 20.2%. For the full year, the economy expanded 2.9%, accelerating from 1% growth in the previous year.

Israel’s economy expanded at an annualized rate of 4.2% in Q4 2025, exceeding initial estimates of 4%, but marking a sharp slowdown from a downwardly revised 12.1% growth in Q3. The moderation was largely driven by weaker domestic demand, with private consumption contracting 3.7% and fixed asset investment declining 4.0%. These declines were partially offset by a modest 1.5% increase in public consumption. Meanwhile, business GDP showed resilience, rising 7.2% and providing some support to overall economic activity. On the external front, exports of goods and services, excluding start-ups and diamonds, rose 24.5%, while imports fell 2.9%, excluding defense-related imports, ships, aircraft, and diamonds. For the full year, Israel’s economy grew 2.9%, revised down from initial estimates of 3.1%, but accelerating from 1% growth in the previous year.

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%.