Israel’s GDP numbers: Growth moderates, exports surged in Q4

ISRAEL - In Brief 17 Feb 2026 by Sani Ziv

---

The initial estimate for the fourth quarter of 2025 shows that Israel’s GDP grew by 4% (annualized), slowing from an upwardly revised 12.7% in the third quarter (previously reported as 11.1%). The GDP fell sharply in Q2 2025 after the economy shut down for two weeks due to the war. Although activity rebounded in Q3 and continued expanding in Q4, the level of GDP remains 3.0% below potential growth. On the demand side, the fourth quarter was characterized by weakness in domestic demand. Private consumption contracted 3.6% (annualized), reflecting a sharp decline in spending on durable and semi-durable goods. Investment in fixed assets declined by 6.4%, while public consumption expanded moderately by 1.7% (all figures annualized). The chart below compares actual GDP with its estimated potential path. Following a sharp contraction in 2024 during the war, economic activity rebounded gradually. However, the level of GDP remains below the estimated potential growth path. Actual vs. potential GDP, 2021–2025 (constant prices) Source: Israel Central Bureau of Statistics (CBS); author’s calculations (potential GDP estimate) The main engine of growth in Q4 was exports, which surged by 33%, compared with only a 2% increase in imports. As a result, net exports made a decisive contribution to GDP growth. The increase in exports was broad-based, encompassing most export categories including industrial goods, agricultural products, and services. Notably, exports of tourism services rose by 26%. Overall GDP grew by 4%, while the business-sector product rose by 7%, a figure consistent with the strong expansion in exports. Full-year 2025 and structural shifts In annual terms, Israel’s ec...