Israel's economy contracted at an annualised rate of 3.3% in Q1 2026, as the war against Iran weighed on output.
The decline was less than the 4% drop forecast by economists.
The economy grew 2.9% in 2025 and was expected to rebound 5% in 2026 after a Gaza ceasefire. However, the US-Israeli conflict with Iran began on February 28.
Iran's ballistic missile fire closed schools and hurt businesses.
The Bank of Israel sees 3.8% growth this year, depending on the Iran ceasefire.
Consumer spending fell 4.7%, exports 3.7%, government spending 4.8%. Fixed asset investment rose 12.6%.
Per capita, the economy shrank 4.5%.
