Recovery for the Israeli economy after 'Lion's Roar': GDP jumped by 15.4% in the second quarter of 2026

The Central Bureau of Statistics (CBS) published today, Sunday, the national accounts data for the second quarter of 2026. The figures show that during this period, the economy managed to recover from the impact of Operation 'Lion's Roar' and return to growth, which stood at 15.4% in annual terms (3.6% in quarterly terms), following a 3.8% decline (1% in quarterly terms) in the first quarter.

The strong growth in the second quarter reflects a compensation for the first quarter, which was weak due to the war, meaning a significant portion of the activity was deferred from the war period to the second quarter. Data regarding the business sector is even more encouraging, showing an increase of 16.6%.

To examine the state of the economy more broadly, it is worth comparing the first half of 2026 with the second half of 2025; this comparison indicates a 3.2% increase in GDP. If the economy continues to produce at this rate in the second half of 2026, the growth will be lower than the forecasts of the Bank of Israel and the Ministry of Finance, which project 4% growth for 2026, though it is still too early to determine the final trend for the year. Notably, the business product grew by 4.7% during this half-year.

The primary growth engine in the second quarter was public consumption expenditure, which rose by 19.5% in annual terms (4.6% in quarterly terms). This is because the budget was approved only at the end of the first quarter, leading to more intensive government spending in the second. This fact slightly tempers the 'celebrations' over the strong quarterly results, as growth driven by government spending is considered 'unstable'. However, looking at the half-year, the growth in public expenditure is low and does not constitute the central component of growth.

Other key indicators include:

1. A 0.4% decrease in private consumption expenditure in the half-year calculation, which may indicate a slowdown in economic activity.

2. A strong recovery in exports, up 25.2% in annual terms.

3. A 6.3% increase in investments in fixed assets (1.5% in quarterly terms), while the half-year growth for this metric stands at 10.6%.