IMF raises Israel's 2026 growth forecast to 4.5%

ISRAEL - In Brief 13 Oct 2026 by Sani Ziv

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The International Monetary Fund (IMF) has raised its growth forecast for Israel to 4.5% in 2026, up from 3.5% previously. The upward revision appears reasonable given the strong rebound in GDP in the second quarter, where the economy expanded by 15.9% annualized, and given positive economic indicators pointing to continued growth in the third quarter. Looking ahead, the IMF expects growth of 4.4% in 2027, unchanged from its April forecast but below the 5.5% projected by the Bank of Israel and the Ministry of Finance. Given that Nvidia's activities in Israel could contribute close to 1 percentage point to GDP growth, the IMF's 2027 forecast may prove too conservative. However, these relatively optimistic growth projections assume a period of relative calm on the various security fronts, an assumption that remains highly uncertain. Inflation projections were left largely unchanged at 2.3% in 2026, slightly above the 2.2% projected in October 2025. For 2027, inflation is expected to ease further to 2.1%. On the fiscal side, the IMF projects a general government deficit of 5.8% of GDP in 2026, compared with 5.2% in 2025 and 8.1% in 2024. In 2027, the deficit is expected to narrow to 5.1% of GDP. The IMF uses the broader general definition of government, which includes local authorities and the National Insurance Institute, whereas we expect the central government budget deficit to be around 4% of GDP in 2026. The IMF also expects public debt to increase from 67.9% of GDP in 2025 to 68.8% in 2026 and 69.5% in 2027.