Israel’s economy grew at an annualized rate of 4.2% in Q4 2025, slightly above the initial estimate of 4%, but well below the sharply revised 12.1% expansion recorded in Q3. The slowdown was driven mainly by weaker domestic demand: private consumption contracted by 3.7%, and fixed asset investment fell by 4.0%. These declines were partly offset by a modest 1.5% increase in public consumption.
Business-sector GDP remained relatively robust, expanding by 7.2% and helping to support overall activity. Externally, exports of goods and services—excluding start-ups and diamonds—rose by 24.5%, while imports declined by 2.9%, excluding defense-related imports, ships, aircraft, and diamonds.
For the full year, Israel’s economy grew by 2.9%, revised down from the initial estimate of 3.1%, but still an acceleration compared with the 1% growth recorded in the previous year.
