by Meirav Arlosoroff at Haaretz
Since October 7, defense spending has jumped by tens of billions of shekels a year and Israel’s reputation has suffered overseas. The economy will feel these effects for years to come, even if we are far from the ‘lost decade’ after the Yom Kippur War
Medium-range forecasts of Israel’s growth – i.e., the next five years – have become gloomier as the negative impact of the Gaza war on the economy has become clearer. Official bodies have cut their forecasts for gross domestic product growth from 2027 to 2030 to between 3 and 3.5 percent a year, compared to an average of 4 percent over the previous decade.
Nevertheless, growth in 2026 is expected to be fairly high – 4.7 percent according to the Bank of Israel and 5.2 percent according to the Finance Ministry – because in 2026 the economy is expected to make up for the decline in activity over two years of war.
According to the Finance Ministry’s medium-range forecast, growth of 3.5 to 3.7 percent is expected from 2027 through 2029. But it’s quite likely that this forecast will be revised downward.
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The Bank of Israel doesn’t release…
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