Israel's economy grows on war: citizens will have to pay the price

Updated data from the Central Bureau of Statistics for the second quarter of 2026 shows that Israel's GDP growth of 14.9% on an annualized basis is largely driven by increased government, primarily defense, spending. Revised figures for exports and investments came in lower than initial estimates, indicating an unbalanced economic recovery.

Updated data from Israel's Central Bureau of Statistics, published on September 16, 2026, showed that the country's GDP growth in the second quarter was 14.9% on an annualized basis—slightly below the initial estimate of 15.4%. However, the key finding of the analysis lies in the structure of this growth: a significant portion is driven by increased government spending, especially on defense. Government spending growth was revised upward from 19.5% to 22.2%, and defense spending from 14.7% to 19.8%. At the same time, downward revisions affected exports and investments. Export growth excluding high-tech is now estimated at 16.6% instead of 25.2%, and investment growth at 4.1% instead of 6.3%. The author, Tomer Adoni, draws a parallel with Russia's experience, where military spending temporarily stimulated GDP growth but later led to an economic slowdown. The article warns that the current growth model could lead to long-term negative consequences for Israeli citizens, who will ultimately pay for this imbalance.