Israel’s gross domestic product shrank at an annualized rate of 3.3% in the first quarter of 2026, according to an initial assessment published by the Central Bureau of Statistics on Sunday.
The contraction of the economy is registered on the backdrop of the war with Iran, and is less severe than a forecast by analysts in the Finance Ministry who anticipated a 9.5% drop in GDP, financial outlet TheMarker reported.
The contraction was also lower than the 4.3% annualized contraction of GDP in the second quarter of 2025, when June’s 12-day war with Iran took place.
The Bank of Israel estimates a rebound for the economy with 3.8% growth this year, if the conflict does not resume, according to Reuters.
The central bank’s forecast from before the war stood at 5.2% growth for the entire year.
