Israel's economy surprises with forecast after war spending

Despite war expenditures of 450 billion shekels, Israel's economy shows resilience and may accelerate growth. Forecast for 2026 is 4%, for 2027 — 5.5%. Government bond yields fell to 4.17%, inflation at 1.5%, budget deficit at 3.2% of GDP. Expert warns of budgetary challenges for the new government.

Despite spending 450 billion shekels to finance the war, Israel's economy shows resilience and may accelerate growth next year. This is reported by Maariv in an article by economic commentator Shlomo Maoz. According to the expert, Israel finds itself in a more favorable economic position than several leading European countries. The yield on ten-year government bonds stands at 4.17%, compared to 5.1% in early May 2024. Annual inflation is estimated at 1.5%, the base interest rate at 3.35%, and the budget deficit as of August 2026 was 3.2% of GDP. The Israeli economy is expected to grow by 4% in 2026, and growth may accelerate to 5.5% in 2027. However, the budget deficit next year, according to Maoz's estimate, will increase to 4.2% of GDP, while the government debt-to-GDP ratio will remain at 69%. The expert warns of serious challenges ahead: the new government will need to prepare the 2027 budget, taking into account the consequences of the war, defense sector needs, and the need to maintain economic stability.