Israel’s economy shrank at an annualized rate of 3.8% in the first quarter of 2026, following a downwardly revised 2.8% growth in the previous quarter, matching preliminary estimates.
The contraction was driven largely by the “Harry’s Uproar” war, which disrupted economic activity.
Domestic demand weakened, with consumer spending falling 4.9% and public consumption declining 4.8%.
Net trade also weighed on GDP, as imports of goods and services, excluding defense imports, ships, aircraft, and diamonds, rose 1.8%, while exports of goods and services, excluding start-ups and diamonds, fell 32.7%.
On the other hand, fixed asset investment increased by 12.8%.
