Israel's fiscal deficit narrows, thanks to Nvidia
Israel's fiscal deficit for 2026 is projected at 4% of GDP, below the 4.9% target, driven largely by tax revenues from Nvidia. Economists warn of growing dependence on the company and underlying structural issues, including a tripled defense budget and high debt servicing costs.
Israel's fiscal deficit for 2026 is projected at 4% of GDP, significantly lower than the Ministry of Finance's target of 4.9%, according to economists' estimates. The improvement is largely attributed to tax revenues from technology giant Nvidia, which pays tax at a rate of 7.5% on net exports from Israel, contributing an estimated NIS 2.5 billion per quarter. Leader Capital Markets chief economist Jonathan Katz notes that tax revenues so far this year are 13.3% higher than the corresponding period last year, with much of the increase attributable to Nvidia. Central Bureau of Statistics data shows that without Nvidia, 2025 GDP growth would have been 2.1% instead of 3.5%. Exports that do not pass Israel's borders rose 74% to $7 billion last year. However, economists warn of growing dependence on a single company and underlying structural problems, including a defense budget that has almost tripled since the war and a debt-to-GDP ratio of 68.5%. Bank Hapoalim chief markets strategist Modi Shafrir points to a rising risk premium and potential election-related fears.