Israel economy at a glance

Latest figures for Israel: inflation, growth, interest rates, jobs, bond yields, debt and taxes. Updated 6 November 2026. Open Israel on the interactive map →

Key figures

Indicator	Latest	Period	Previous
Inflation (consumer prices, year on year)	1.6%	September 2026	1.5% August 2026
Core inflation (excluding food and energy)	1.4%	September 2026	1.3% August 2026
Real GDP growth (year on year)	7.3%	Q2 2026	2.6% Q1 2026
Policy rate (Bank of Israel)	3.25%	November 2026	3.25% October 2026
Unemployment rate	3.0%	September 2026	2.8% August 2026
10-year government bond yield	4.16%	October 2026
Retail sales (year on year)	6.6%	August 2026	2.0% July 2026
Industrial production (year on year)	17.8%	July 2026	29.2% June 2026
House prices (year on year)	−1.6%	Q2 2026	−1.4% Q1 2026
Stock market (TA-125)	4,091	October 2026

Questions and answers

What is the inflation rate in Israel?

Israel's annual inflation rate was 1.6% in September 2026, up from 1.5% in August 2026.

What is the interest rate in Israel?

The Bank of Israel policy rate is 3.25% (as of November 2026). The next rate decision is due on 23 November 2026.

How fast is Israel's economy growing?

Israel's real GDP grew 7.3% year on year in Q2 2026. The IMF's October 2026 World Economic Outlook forecasts growth of 4.5% in 2026 and 4.4% in 2027.

What is the unemployment rate in Israel?

Israel's unemployment rate was 3.0% in September 2026, up from 2.8% in August 2026.

What is Israel's 10-year government bond yield?

Israel's 10-year government bond yield averaged 4.16% in October 2026.

How much government debt does Israel have?

Israel's government debt is about 68.5% of GDP (latest annual figure), with a budget deficit of 4.7% of GDP.

What is Israel's credit rating?

Israel's sovereign credit ratings: S&P A, Moody's Baa1.

What is the VAT rate in Israel?

Israel's standard VAT rate is 18% (2026 rules).

What is the corporate tax rate in Israel?

Israel's corporate income tax rate is 23.0% (2026 rules).

Who leads Israel?

Israel is led by Prime Minister Benjamin Netanyahu (heads the outgoing 37th government until a new coalition is sworn in); President Isaac Herzog (head of state). Next election: Coalition talks after the 27 Oct 2026 Knesset election: the leader Herzog picks gets 28 days, extendable by 14, to form a government, or a new election may follow; otherwise the next regular election is due in 2030.

Outlook

The Bank of Israel (July) projects growth of 4.0% in 2026 and 5.5% in 2027, with inflation near 1.8% and room for rates to fall towards 3%. Upside comes from the post-war rebound and lower risk premia. Downside: the outcome of the 27 October election and coalition talks, renewed regional escalation, defence-driven fiscal slippage, and a strong shekel squeezing exporters (manufacturers report layoffs and R&D moving abroad).

Why Israel matters for the world economy

Israel's trade weight is modest, but it matters globally as a high-tech and defence-tech hub (chip design, cybersecurity, AI) closely tied to US capital markets, and as a central actor in Middle East security. Escalation involving Israel and Iran feeds directly into oil, LNG and shipping risk premia across the Gulf, Red Sea and eastern Mediterranean, and Israel's offshore gas supplies Egypt and Jordan. A shekel near 30-year highs and a large stock of foreign assets ($1 trillion held abroad by residents) also make Israeli institutional investors meaningful players in US and European markets.

Politics

Netanyahu's outgoing coalition (Likud, Shas, United Torah Judaism, Otzma Yehudit and Religious Zionism) won 53 of 120 seats in the 27 October election and lost its majority, although Likud stayed the largest party with 27. Gadi Eisenkot's Yashar came second with 21; with Bennett's Together, Yisrael Beiteinu and the Democrats his camp has 48 seats, and the Arab parties won 19, so neither side has a clear path to 61. President Herzog began consultations on 4 November. Eisenkot promises a state inquiry into 7 October, national service for all and repeal of the judicial overhaul. The economy is rebounding after the late-February 2026 US-Israel campaign against Iran, but reservist call-ups, defence costs and the shekel remain key issues for the next coalition.

System: Unitary parliamentary republic.

Economy and taxes

GDP: US$617 billion
Population: 10.1 million
Government debt: 68.5% of GDP
Budget balance: −4.7% of GDP
Current account: 1.5% of GDP
Main exports: High-tech services (software, cybersecurity, R&D), cut diamonds, pharmaceuticals, machinery and electronics, medical instruments, refined petroleum, chemicals, defence equipment
Top export markets: United States (26.4%), China (7.2%), Palestinian territories (6.0%), United Kingdom (4.1%), India (4.0%)
IMF growth forecast: 4.5% in 2026, 4.4% in 2027
IMF inflation forecast: 1.8% in 2026, 2.0% in 2027
Currency: ILS
Freelancer tax: A self-employed person earning the average wage (ILS 163,104 a year) pays about 25.6% of it in income tax and social contributions (2026 rules)
Top income tax rate: 50.0%
Energy self-sufficiency: 99% (2024)

Recent news

31 October 2026 Netanyahu's bloc loses its majority, but no side has a clear path to 61 seats Times of Israel
With all votes counted, Netanyahu's outgoing coalition won 53 of 120 seats; Likud is the largest party on 27 and Gadi Eisenkot's Yashar second on 21. Eisenkot's camp has 48 seats and the Arab parties 19, and President Herzog begins talks with party leaders on 4 November.
28 October 2026 Shekel and shares fall as the election points to a deadlock Trading Economics
As early results showed neither bloc near the 61 seats needed to govern, the shekel fell more than 2% to about 3.1 per dollar, its weakest since April. The TA-125 index dropped nearly 3% and the 10-year bond yield rose above 4.1%.
27 October 2026 Israelis vote in a tight election with neither bloc seen reaching a majority Al Jazeera
Voting runs until 10pm on 27 October. A poll average gave Eisenkot's opposition bloc 54 seats and Netanyahu's bloc 50, short of the 61 needed. The final count is due by Friday and official results on 4 November, so coalition talks may take weeks.
21 October 2026 Bank of Israel holds rates at 3.25% a week before the election Reuters via Devdiscourse
The central bank paused after three straight cuts, as all 15 economists polled by Reuters expected, choosing to wait for the 27 October vote even though inflation, at 1.6% in September, sits below the middle of its 1-3% target.
19 October 2026 Israel heads into 27 October election with opposition leaders pledging cooperation Wikipedia
With the Knesset dissolved since July, Likud is running with New Hope, while five opposition chiefs have agreed to avoid attacking each other and to aim for a 'government of repair'.
15 October 2026 Israeli inflation edges up to 1.6% but stays below target midpoint Trading Economics / CBS
September CPI was below the 1.8% consensus as prices fell 0.5% on the month, keeping the door open for further easing after the election.

Headlines and summaries are compiled daily from the linked reports with AI assistance.