By Pesach Benson • September 7, 2026
Jerusalem, 7 September, 2026 (TPS-IL) — Israel’s economy showed continued resilience ahead of the Jewish New Year of Rosh Hashanah, with gross domestic product (GDP) rising 3.2% in the first half of 2026, foreign investment reaching a record $26 billion in 2025 and inflation falling to 1.5%, according to data released by the Finance Ministry on Monday.
The ministry said the figures reflected continued economic growth despite prolonged uncertainty and the war.
GDP grew 3.2% in the first half of 2026 compared with the second half of 2025. Foreign investment rose 78% in 2025 to $26 billion, with the ministry saying the trend continued during the first half of this year.
High-tech remained a major driver of growth, with capital raised by the sector increasing 53.6% in the first half of 2026 compared with the same period last year. Israel ranked third globally in artificial intelligence commercialization, sixth in development and seventh in research, according to the ministry.
Inflation declined from 2.5% around last Rosh Hashanah to 1.5%, placing it at the lower end of the government’s 1%-3% target range.
Financial markets also posted gains. The TA-125 stock index rose 35% over the past year, while the shekel appreciated 11% against the U.S. dollar. Israel’s economic risk premium, measured through credit default swaps, fell 29% and is now close to its level before the war, according to the ministry.
The government’s budget deficit declined to 3.3% from 4.7%, although the ministry cautioned that the deficit could rise somewhat in the coming months. The official deficit target for 2026 is 4.9%.
Israel’s debt-to-GDP ratio stood at 67.9%, compared with an OECD average of 111%. S&P and Fitch currently rate Israel’s sovereign debt at A, while Moody’s rates it Baa1.
The labor market remained tight, with unemployment at 3.3%, compared with an OECD average of 4.9%. However, the ministry noted that employment levels remain weaker than in other developed economies. The employment rate among people aged 15 to 64 was 71%, compared with an OECD average of 74%.
Nominal GDP per capita is projected to reach about $70,000 in 2026. Adjusted for purchasing power, GDP per capita is estimated at about $60,000, roughly $4,000 below the OECD average on the same basis.
The High Holidays begin with Rosh Hashanah which starts at sundown on Sept. 11.
