Israel’s economy and financial markets are booming — even as conflict rages in the Middle East

In this article

Earlier this month, the Bank of Israel slashed its growth forecast for this year, citing the hostilities in the Middle East.

But, remarkably for a country that has been on an effective war footing for almost three years, the central bank still expects Israel’s economy to grow by 3.8% in 2026, even after the 1.4 percentage point downgrade.

And the bank’s governor, Amir Yaron, told CNBC on April 16 that, if conflicts in the region are resolved, Israel’s economy can rebound to 5.5% next year.

The IMF estimates that Israel’s economy will grow by 3.5% this year, compared to 2.3% for the United States and 1.3% for the EU. It also means Israel’s GDP is forecast to outperform all G7 countries in 2026. Next year, Israel is forecast by the IMF to see economic growth of 4.4%, continuing to outperform many major developed economies.