Israel’s economy contracted by 3.5% on an annualized basis in the second quarter of 2025, reversing from a downwardly revised 3.4% growth in the previous quarter, preliminary estimates showed.
The contraction was largely driven by a 12-day war between Israel and Iran in mid-June, which disrupted economic activity.
All major components of GDP saw declines: private consumption fell by 4.1%, government spending by 1%, and fixed capital formation by 12.3%.
On the trade front, exports and imports shrank by 12% and 3.5%, respectively.