Israel: Economy rebounds in Q3 2025
GDP reading surprises to the upside: Israel’s GDP expanded 12.4% in seasonally adjusted quarter-on-quarter annualized (SAAR) terms in Q3, following a 4.3% contraction in the prior quarter and nearly double market expectations. The economy benefited from the normalization of activity following the brief war with Iran in Q2, and is now larger than it was before conflict with Hamas began in Q4 2023.
Broad-based expansion: Relative to the previous period’s data, figures in Q3 improved for private consumption (+23.0% in seasonally adjusted quarter-on-quarter annualized terms vs -5.3% in Q2), government consumption (+4.4% vs 0.0% in Q2), fixed investment (+36.9% vs -11.1% in Q2), exports of goods and services (+23.3% vs -5.2% in Q2) and imports of goods and services (+16.5% vs +8.0% in Q2).
Panelist insight: On the outlook, Goldman Sachs analysts said:
“We expect sequential GDP growth to decline in the coming quarters before picking up again in the middle of next year. This is due to [Q3]’s print in part reflecting a recovery from the war against Iran in June and also because it is quicker to consolidate defence expenditures than to increase investment, and for labour to be effectively reallocated into the private sector.”