TEL AVIV: The International Monetary Fund lowered its estimate for Israel’s economic growth in 2026 to 3.5 percent from a prior 4.8 percent, it said on Wednesday citing regional tensions.
In a report, the IMF also expects inflation to rise temporarily due to higher energy prices and supply constraints despite shekel appreciation to a more than three-decade peak against the dollar.
“The elevated regional tensions are casting a shadow on Israel’s economy,” it said, referring to conflicts with Iran, Hezbollah and Hamas.
The IMF noted that the economy has shown resilience despite repeated shocks, but that elevated regional geopolitical uncertainty and long-standing structural impediments are expected to weigh on the outlook.
“Furthermore, renewed intensification of regional tensions remains a key downside risk,” it said.
