The Israeli economy contracted by 3.5% in the second quarter of 2025
Israel’s Central Bureau of Statistics announced on Sunday that the Israeli economy contracted at an annual rate of 3.5% during the second quarter of this year, affected by the two-week closure in June during the military operation in Iran.
According to preliminary estimates, GDP declined by 0.9% quarter-on-quarter, while per capita GDP fell by 4.4% year-on-year, as business GDP contracted by a further 6.2%.
The decline affected all components of GDP, with private consumption falling by 4.1% and public consumption by 1%.
Fixed asset investment fell by 12.3%, and exports (excluding technology startups and diamonds) fell by 3.5%; Imports, on the other hand, rose by 3.1%.
The Central Bureau of Statistics said the data was significantly affected by the process in Iran, particularly in private consumption and fixed asset investment.
According to the Globes economic website, these figures are consistent with estimates by the Ministry of Finance’s chief economist, who predicted a few days ago that the economy would be negatively impacted in the second quarter due to the economic activity halted for approximately two weeks in June.
The same official predicted a partial recovery in the third quarter, citing previous experiences, where signs of recovery began to appear in July and August.
Modi Shafir, chief capital markets strategist at Bank Hapoalim, explained that consumer purchases via credit cards rose 13.4% in July and August compared to the same period last year, and by 3.7% in the last week alone, according to Globes.
Meanwhile, the Ministry of Finance lowered its forecast for Israeli economic growth in 2025 by half a percentage point, from 3.6 to 3.1%, due to the repercussions of the recent war.
