Moody's raises Israel growth forecast to 5% for 2026
Moody's, the credit rating agency, raised Israel's 2026 growth forecast to 5%.
The short version
- The jump comes from high-tech exports and new overseas measurement rules.
- Domestic activity inside Israel remains slower than the headline numbers show.
- The agency also lowered its 2026 deficit forecast to 5% of GDP.
Credit rating agency Moody's just raised its growth forecasts for the Israeli economy, projecting 5% growth for 2026 and 6% for 2027. According to a report published last Thursday in Globes, the previous forecasts stood at 3.7% for this year and 5% for next year.
But behind the impressive numbers, the agency warns that the figures do not reflect a real improvement in day-to-day domestic economic activity. Much of the upward revision is due to statistical changes in how the Central Bureau of Statistics measures Israeli companies operating abroad, driven by a surge in high-tech artificial intelligence exports.
The Bank of Israel anticipates growth of 5.6% this year, but that number drops to just 3.4% when overseas production is excluded. Alongside its warnings on growth, Moody's presented a brighter picture of the country's finances, lowering its 2026 deficit forecast from 5.9% to 5% of GDP.
The national debt-to-GDP ratio forecast also dropped from 70.1% to 68.5%, driven by higher tax revenues than expected. The agency kept Israel's credit rating steady at Baa1 with a stable outlook, pointing to institutional strength and international relations as the key risks to watch.
