IMF lowers Israel growth forecast over regional tensions

The International Monetary Fund has lowered its estimate for Israel's economic growth in 2026 to 3.5 percent, down from a previous forecast of 4.8 percent, citing regional tensions.

In a report on Wednesday, the IMF said it also expects inflation to rise temporarily due to higher energy prices and supply constraints, despite the shekel appreciating to a more than three-decade peak against the dollar.

"The elevated regional tensions are casting a shadow on Israel's economy," the IMF said, referring to conflicts with Iran, Hezbollah and Hamas.

The IMF noted that Israel's economy has shown resilience despite repeated shocks, but said elevated regional geopolitical uncertainty and long-standing structural impediments are expected to weigh on the outlook.