March 11, (THEWILL) — Israel’s economy is expected to grow more slowly in 2026 after the government revised its growth forecast and approved an additional $10.3 billion in defence spending amid ongoing military operations against Iran.
The country’s Finance Ministry announced late Tuesday that it had reduced the economic growth projection for 2026 to 4.7 percent, down from the earlier estimate of 5.2 percent, citing disruptions caused by the current security situation.
According to the ministry, the revised outlook reflects the impact of the large-scale mobilisation of reserve forces, which has affected workforce availability and business operations across several sectors of the economy.
Officials said temporary shutdowns in parts of the economy have also contributed to the anticipated slowdown, while heightened geopolitical tensions are creating uncertainty that is weighing on investment and foreign trade.
The ministry further noted that the ongoing conflict has resulted in a short-term decline in private consumption, as households and businesses adjust to the evolving security environment.
Meanwhile, the Israeli government approved a number of fiscal measures overnight as part of its 2026 budget framework aimed at responding to the security challenges.
Among the measures is an increase in the budget deficit ceiling to 5.1 percent of gross domestic product (GDP), up from the previously approved 3.9 percent, giving the government additional fiscal flexibility to finance security-related expenditures.
The government also authorised 32 billion shekels (about $10.3 billion) in additional defence spending to support military operations and strengthen national security.
Officials added that a further 12.8 billion shekels has been earmarked as a contingency allocation should the conflict continue at a high intensity, underscoring the government’s efforts to prepare for prolonged security challenges while managing economic stability.
Leave a comment