Bond.az reports that Israel's economy shrank in the first quarter of 2026, with GDP down by an annualized rate of 3.3%, compared to growth of 2.9% in 2025. The war with Iran weighed heavily on the economy.
Consumer spending fell 4.7% in Q1 2026, while the economy contracted 4.5% on a per capita basis. Despite a ceasefire with Hamas in October 2025, the war with Iran that began in late February disrupted businesses due to ballistic missile fire.
The Bank of Israel now expects GDP growth of 3.8% in 2026 if the ceasefire with Iran holds. However, the current outlook remains uncertain as the conflict continues to impact economic activity.
