Israel Reports 12.4% Q3 GDP Growth as Consumer Spending and Exports Lift Market Sentiment

Israel’s economy showed a sharp jump in the third quarter after a weak second quarter tied to the June clash with Iran. The Central Bureau of Statistics said GDP rose at an annual pace of 12.4% from the prior quarter. The gain came in above the 8% view from analysts. It also marked a fast turn from the 4.3% drop in the second quarter. The move higher came as daily life picked up again once the short June clash ended. It also came as more staff came back to work after long reserve duty tied to the Gaza war.

Spending and Trade Help Lift Growth

Private spending rose 23% as shoppers returned to stores and resumed travel. Trade also played a part as exports rose 23%. In addition, firms lifted plans for new build work and tech tools as fixed investment rose 36.9%. Government spending rose 4.4% as state aid stayed in place during the year. As a result, broad parts of the economy moved up at once, and this helped drive the sharp turn in GDP.

Stocks in Tel Aviv rose as the trend of growth remained strong. The TA 125 index hit a new high in recent weeks, after rising 43% year-to-date. The shekel also rose and is now up about 11% for the year against the dollar.

Outlook for the Next Year

Israel’s growth rate was 1% in 2023, and it is on track for nearly 2.5% in 2024, according to the Bank of Israel’s projections. The Finance Ministry sees a 2.8% pace. Both see a lift in 2026 once the drag from the Gaza war fades. For now, a ceasefire deal brokered by the U.S. has held, giving firms more room to plan ahead. As a result, the year has shown that the economy can still recover once shocks ease and work life begins to settle.

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