15.4% jump in GDP: The surprising figure of the Israeli economy
Psagot economists analyze the unusual growth in the second quarter of the year, explain what caused the jump in private consumption, and warn about the dramatic decision expected in the US regarding the interest rate level.
Economists at Psagot Investment House conducted an economic review focusing on US inflation data, which they say "clearly supports leaving the interest rate unchanged in September."
The main points of the weekly review by Psagot Investment House:
"Israel's GDP grew in the second quarter at a good pace, although the growth figure of 15.4% in annual terms is in comparison to the first quarter of 2026, during one-third of which the economy was shut down due to Operation 'Lion's Roar'. The growth in the second quarter of 2026 brings the GDP level closer to its potential level, but several more quarters of above-average growth are needed to close the gap. The recovery in private consumption was mainly due to a jump in purchases of durable goods, and not just vehicles. The investment sector showed growth in both real estate and investment in equipment and machinery. Goods exports recorded an unusual jump that surpassed services exports. The expansion of production activities by Israeli companies abroad contributes to GDP but does not fully trickle down to the local economy. In the US, reasonable inflation data combined with labor market data reduce the likelihood of an interest rate cut. The US Consumer Price Index did rise by 0.2% on a monthly basis, but inflation has moderated across all different time cuts."
