Macro - Country Economic Forecasts - Israel
We lowered our GDP growth forecasts for Israel to 1.5% from 1.8% for 2024, as the rebound in Israel's GDP stalled in Q2, expanding by only 1.2% at an annualised rate. We also downgraded our 2025 forecast to 3.3% from 3.5%, based on our view that investment growth will be slower in the near term due to elevated interest rates and weak business sentiment. The slower-than-expected GDP growth in Q2 was triggered by the 17% y/y contraction in fixed investment and the 9% y/y drop in exports. However, this was partially offset by robust private consumption which has recovered to pre-war levels. Public consumption also expanded as the government continued its military action against Hamas.
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