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COUNTRY INSIGHTS

Fiscal deficit in 2025 falls to 4.7%, well below forecast
ISRAEL · In Brief · 14 Jan 2026

Israel’s fiscal deficit narrowed more than expected in 2025, falling to 4.7% of GDP from 6.8% in 2024 and below the original 5.2% target. Nominal government spending rose by 4.8%, while revenues surged by 13.8%. Tax collections surprised on the upside even after accounting for the tax hikes imple...

Macroeconomic and geopolitical developments – Weekly report, January 12, 2026
ISRAEL · Report · 12 Jan 2026

The past week was marked by the Bank of Israel’s rate cut and the market’s reaction to this somewhat unexpected move. This came alongside heightened geopolitical developments, most notably the expanding protests in Iran. While the latter do not yet have a direct impact on Israel’s macro outlook, ...

Business-sector survey signals acceleration in activity toward year-end
ISRAEL · In Brief · 07 Jan 2026

The latest Business Survey for December 2025, which provides the closest local proxy to a PMI and covers both the industrial and services sectors, points to a further acceleration in activity toward year-end. The net balance for current activity rose to 20.88 points from 19.68 in November, althou...

Macroeconomic and geopolitical developments – Weekly report, January 6, 2026
ISRAEL · Report · 06 Jan 2026

The year ends on a calmer note, with Israel’s macro-economic environment improving. Still, it is constrained by tight labor markets, and fiscal uncertainty exists. Domestic demand indicators point to solid fourth-quarter momentum, the shekel remains firm, and risk premia have continued to decline...

Bank of Israel cuts rates for a second time, signals a dovish stance; 2026 growth forecast revised higher
ISRAEL · In Brief · 05 Jan 2026

Contrary to market expectations, the Bank of Israel surprised with a second consecutive rate cut. As we noted yesterday, the prevailing macroeconomic conditions supported further easing, leaving little justification for keeping rates at their current level. The policy statement conveyed a more do...

Interest rate review: Bank of Israel seen holding rates tomorrow, despite our view that there is room for further easing
ISRAEL · In Brief · 04 Jan 2026

The Bank of Israel is scheduled to announce its monetary-policy decision for February tomorrow. The near-market consensus is that the policy rate will remain unchanged, reflecting the Bank of Israel’s concerns over a still-tight labor market (with unemployment at around 3%), the risk of pent-up d...

Gasoline price to drop 3.3% on January 1st, supporting continued monetary easing
ISRAEL · In Brief · 30 Dec 2025

Starting January 1st, the price of gasoline in Israel will be reduced to NIS 6.85 per liter. The decline reflects a 10.76% drop in global oil prices and a 2.26% appreciation in the shekel-dollar exchange rate. The 3.66% decline in fuel prices points to a particularly low CPI reading in January, i...

Government advances political inquiry into October 7 as families demand state commission
ISRAEL · In Brief · 22 Dec 2025

Israel’s Ministerial Committee for Legislation approved on Monday a proposed law by MK Ariel Kallner (Likud), backed by Prime Minister Benjamin Netanyahu, to establish a political, non-state commission of inquiry into the failures surrounding the October 7 attack and the ensuing war. Under the pr...

Macroeconomic and geopolitical developments – Weekly report, December 22, 2025
ISRAEL · Report · 22 Dec 2025

Data released over the past week support the view that Israel’s economy is transitioning to a more stable growth phase, with activity expanding at an above-trend pace. Inflation surprised to the downside, easing to 2.4% in November, with underlying measures such as services inflation pointing to ...

Labor market remains tight despite post-war normalization
ISRAEL · In Brief · 17 Dec 2025

Labor market remains tight despite post-war normalization Labor-market indicators continue to point to a tight labor market that may sustain wage pressures and slow the pace of interest-rate cuts, even after the ceasefire. Two new releases this week suggest that labor demand remains strong, while...

November CPI surprises slightly to the downside, inflation eases to 2.4%
ISRAEL · In Brief · 16 Dec 2025

Israel’s consumer price index, published yesterday, surprised slightly to the downside, falling by 0.5% in November, compared with our forecast of a 0.4% decline and a 0.3% decline in the consensus forecast. As a result, annual inflation eased to 2.4%, its lowest level since November 2021. The de...

Macroeconomic and geopolitical developments – Weekly report, December 10, 2025
ISRAEL · Report · 10 Dec 2025

This week’s indicators suggest that the economy is transitioning from a post-war rebound to a more stable and sustainable growth path. Retail activity normalized, while business expectations improved, signaling that firms anticipate stronger orders and output in early 2026. Fiscal data were once ...

Macroeconomic and geopolitical developments – Weekly report, December 2, 2025
ISRAEL · Report · 02 Dec 2025

This week in Israel was once again dominated by political developments. The government is pushing to pass the Draft Bill quickly to secure ultra-Orthodox support ahead of the planned November elections, yet resistance within the coalition and among the public continues to intensify. Prime Ministe...

Israeli startup funding accelerates to $1.4bn in November, supporting sentiment for the shekel
ISRAEL · In Brief · 02 Dec 2025

In November 2025, Israeli startups raised approximately $1.4 billion, bringing total fundraising this year to $15 billion. Overall, in 2024, Israeli companies raised $11.6 billion, up 16.3% from $9.9 billion raised in 2023, and following $20 billion raised in 2022 and a record $34 billion raised ...

Macroeconomic and geopolitical developments – Weekly report, November 25, 2025
ISRAEL · Report · 25 Nov 2025

More than a month after the Gaza ceasefire, Israel’s strategic environment remains unstable. Military gains in Gaza, Lebanon, and Iran have not translated into durable political arrangements. In Lebanon, Hezbollah's rearming and tensions have intensified following recent Israeli strikes. In Gaza,...

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