Israeli economy

Israel economy shrinks 3.3% due to war with Iran

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Hundreds of Israelis gather at Habima Square to protest against Prime Minister Benjamin Netanyahu and the Israeli government in Tel Aviv, Israel on January 17, 2026. [Mostafa Alkharouf – Anadolu Agency]

Official Israeli data revealed that the Israeli economy contracted by 3.3 percent year-on-year during the first quarter of 2026, impacted by the repercussions of the ongoing war with Iran.

According to a report published Sunday by the Israeli economic website Globes, the Israeli Central Bureau of Statistics stated that the Israeli economy experienced a 3.3 percent annual contraction during the first quarter of this year.

The website explained that this sharp decline ended a period of growth that had lasted for two consecutive quarters, indicating that the war with Iran was the primary cause of the recorded economic downturn.

The data showed that the GDP per capita decreased by 4.5 percent annually compared to the last quarter of 2025, which the website described as the most realistic indicator for measuring the standard of living in Israel. The report indicated that the Israeli economy had recorded annual growth of 2.9 percent during the last quarter of 2025, before declining significantly at the beginning of this year.

The Central Bureau of Statistics stated that private consumption expenditure fell by 4.7 percent year-on-year, following a similar decline of 4.6 percent in the last quarter of last year.

Conversely, the report explained that security spending rose by 9 percent year-on-year, amid ongoing military operations.

Israel imposes strict censorship and a broad blackout on its economic and human losses resulting from the wars it is waging in the region, and it prohibits the dissemination of images and videos related to these losses.

READ: Netanyahu says Israeli army nearing completion of Gaza mission, signals readiness for all Iran scenarios

This work by Middle East Monitor is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

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