Israel’s economy grew at an annualized rate of 4.0% in Q4 2025, a sharp slowdown from the upwardly revised 12.7% expansion recorded in Q3, according to preliminary estimates. The deceleration was largely driven by weaker domestic demand: private consumption contracted by 3.6%, and investment in fixed assets declined by 6.4%. In contrast, business-sector GDP increased by 7.1%, helping to partially offset the softness in demand, while public consumption inched up by 1.7%.
On the external front, exports of goods and services—excluding start-ups and diamonds—jumped 25.6%, while imports fell by 3.9%, excluding defense imports, as well as ships, aircraft, and diamonds. For the full year, Israel’s economy expanded by 3.1%.
