IMF cuts Israel's 2026 growth forecast

The International Monetary Fund reported that the Israeli economy contracted by 3.8% during the first quarter of 2026, with expectations that growth will slow to 3.5% due to regional tensions and violence in the area, which are impacting economic activity and increasing inflationary pressures. Additionally, the per capita GDP experienced a quarterly decline of 4.5%, reflecting a downturn in business sector output and consumer spending, while increased defense spending due to the war was also observed. Israel achieved a 2.9% annual growth rate in 2025. The IMF urged the government to adopt more cautious fiscal policies to address potential risks.

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