Israel’s economy expanded at an annualized rate of 14.9% in the second quarter of 2026, staging a sharp rebound from a revised 1.7% contraction in the first quarter as the impact of the war with Iran diminished. Although robust, the figure came in slightly below both the initial preliminary estimate and market expectations of 15.9%.
The downward revision was driven primarily by softer growth in exports of goods and services (excluding startups and diamonds), which increased 16.6% compared with 25.2% in the first estimate, and by weaker fixed capital formation, which slowed to 4.1% from 6.3%. Even so, overall growth remained strong, underpinned by solid gains in private consumption (15.0% vs. 14.7% previously) and public consumption (22.2% vs. 19.5%).
For the first half of 2026, the annualized growth rate was revised up to 3.5% from 1.5%.
