Israel’s Finance Ministry said late Tuesday that it has lowered the country’s economic growth forecast for 2026, citing the impact of ongoing military operations against Iran.
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The ministry revised its projection for economic growth to 4.7 per cent, down from a previous estimate of 5.2 per cent, saying the change reflects disruptions to economic activity caused by the current security situation.
According to the ministry, the revised outlook takes into account the large-scale mobilisation of reserve forces, which has affected business operations across several sectors.
Temporary shutdowns in parts of the economy have also contributed to the slowdown.
Officials noted that the conflict has led to a short-term decline in private consumption, while heightened geopolitical uncertainty is weighing on investment and foreign trade.
Separately, the Israeli government approved several measures overnight as part of the 2026 budget framework aimed at addressing the evolving security situation.
Among the measures is an increase in the budget deficit ceiling to 5.1 per cent of gross domestic product, up from 3.9 per cent previously.
The government also authorised an additional 32 billion shekels (approximately 10.3 billion U.S. dollars) in defense spending.
A further 12.8 billion shekels had been set aside as a contingency allocation should the conflict continue at a high intensity, officials said.
Xinhua/NAN
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