Israel ranked No. 3 among world’s strongest economies

Israel placed third in The Economist’s ranking of the world’s strongest economies in 2025. The London-based magazine has conducted its search for the “economy of the year” for five years now.

“Israel has continued its strong recovery from the chaos of 2023, and Ireland only just misses out on top spot,” The Economist reported.

“Although Czech and South Korean firms have done well this year, nowhere has done better (in local-currency terms) than Israel. In the past year the share price of the country’s most valuable listed company, Bank Leumi, has risen by around 70%,” the magazine added.

Taking the No. 1 spot in this year’s ranking is Portugal. At No. 2 is Ireland.

Israel’s labor market stayed strong in October as the high-tech sector showed signs of recovery, according to the latest data released by the Jewish state’s Central Bureau of Statistics on Nov. 17.

And according to the Israel Innovation Authority’s annual “Status Report on Israeli High-Tech 2025,” published on Sept. 17, the country’s high-tech industry posted a record year for exits and cemented its global leadership in Deep-Tech.

The report, published alongside the first-ever “Israeli Deep-Tech Report” prepared with DealRoom, a database management company based in Amsterdam, found that more than 1,500 Deep-Tech companies are active in Israel, raising more than $28 billion since 2019.

Deep-tech refers to breakthrough technologies rooted in scientific discovery and advanced engineering, developed to tackle complex global challenges and to open entirely new industries.

The cumulative valuation of private Israeli Deep-Tech firms now exceeds $177 billion, 15 times more than a decade ago.

At the same time, the report underscored troubling macroeconomic signals. High-Tech output has been stagnant for two consecutive years, holding steady at 17% of GDP, while R&D employment fell 6.5% in the first half of 2025.

Venture-capital fundraising by Israeli funds has plunged nearly 80% since its 2022 peak, and new company formation has dropped to half the level of a decade ago.

“This is a moment of truth,” said Dror Bin, CEO of the Israel Innovation Authority. “On the one hand, Israel is consolidating its position as a global Deep-Tech center, second only to the U.S. On the other hand, output is flat, R&D roles are shrinking, and entrepreneurship is declining. These are not marginal data points but indicators of risk we take very seriously.”

Gila Gamliel, minister of innovation, science and technology, framed the findings against the backdrop of Israel’s ongoing war and global antisemitism.

“Even in challenging years, when Israel is fighting a war on seven fronts, Israeli innovation proves its strength,” she said. “Our duty is to continue investing in human capital, research and development, and international cooperation so that Israel not only preserves its advantage but also leads global innovation in the coming decade.”