FX.co ★ Israeli Economy Shrinks 3.5% in Q2 Amid Conflict with Iran

Israel's economy experienced a contraction of 3.5% on an annualized basis in Q2 of 2025, marking a shift from the revised 3.4% growth observed in the previous quarter, according to preliminary estimates. This downturn was primarily attributed to a 12-day conflict between Israel and Iran in mid-June, which significantly disrupted economic activities. Key GDP components exhibited declines: private consumption dropped by 4.1%, government expenditures decreased by 1%, and fixed capital formation fell by 12.3%. In terms of trade, both exports and imports reduced by 12% and 3.5%, respectively.