Israel economy grows 15.4% in Q2 following wartime contraction

Israel’s economy experienced a significant recovery in the second quarter of 2026, with GDP growing by 15.4% on an annualized and seasonally adjusted basis. This surge follows a 2.2% contraction in the first quarter of the year, which was attributed to the economic impact of the military campaign against Iran.

The growth rate significantly exceeded economist expectations, which had averaged around 8.3% to 10%. Key drivers of this expansion included a 35.2% jump in the export of goods and services, a 19.5% increase in government consumption, and a 14.7% rise in private consumption. Business output also saw a notable increase of 16.6%.

In response to these figures, the Bank of Israel has previously raised its 2026 economic growth forecast to 4%, with expectations for growth to accelerate to 5.5% in 2027. Analysts noted that while the recovery is robust, underlying economic data remains subject to volatility.