FX.co ★ Israel Economy Contracts 3.8% in Q1

Israel’s economy contracted at an annualized rate of 3.8% in the first quarter of 2026, following a downwardly revised 2.8% expansion in the previous quarter, in line with preliminary estimates. The downturn was driven primarily by the "Harry’s Uproar" war, which significantly disrupted economic activity. Domestic demand weakened, with private consumption declining by 4.9% and public consumption falling by 4.8%. Net exports also dragged on growth: imports of goods and services (excluding defense imports, ships, aircraft, and diamonds) rose by 1.8%, while exports of goods and services (excluding start-ups and diamonds) plunged by 32.7%. In contrast, investment in fixed assets increased by 12.8%.