# Israeli economic recovery and growth > Live situation record from CLSTR: https://clstr.news/situations/israeli-economic-recovery-and-growth > Updated: 2026-08-22T03:27:10.000Z. Sources: 6. Developments: 2. 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, which was attributed to the economic impact of the military campaign against Iran. While initial reports highlighted a broad increase in exports, government consumption, and private consumption, subsequent analysis specified that much of the expansion was driven by offshore production from chip and AI companies, including Nvidia, Nova, and Camtek. Without these export-oriented effects, domestic growth was recorded at 14.4%. In the financial sector, defense and banking have provided stability. Defense contractor Elbit Systems reported a record order backlog of 32 billion USD, and Bank Hapoalim reported a quarterly profit of 830 million USD. Despite low inflation of 1.5%, the Bank of Israel has signaled caution regarding interest rate cuts, with the benchmark rate held at 3.5% due to fiscal risks and labor market uncertainties. ## Timeline ### 2026-08-22: Israel economy shows 15.4% GDP growth driven by AI and chip exports Israel's GDP grew by 15.4 percent in Q2 2026, driven largely by AI and chip offshoring. Defense and banking sectors support the iShares MSCI Israel ETF amid cautious central bank signals. 2 sources. https://clstr.news/cluster/israel-economy-shows-154-gdp-growth-driven-by-ai-and-chip-exports ### 2026-08-16: Israel economy grows 15.4% in Q2 following wartime contraction Israel’s GDP grew by 15.4% in Q2 2026, marking a strong recovery from a Q1 contraction caused by the war with Iran. Growth was driven by high exports and increased public and private consumption. 4 sources. https://clstr.news/cluster/estonia-and-israel-report-significant-q2-2026-gdp-growth --- Cite as: Israeli economic recovery and growth. CLSTR, https://clstr.news/situations/israeli-economic-recovery-and-growth