Israel central bank cuts 2025 GDP growth projection to 3.3%

Israel central bank cuts 2025 GDP growth projection to 3.3%

The Bank of Israel has revised its 2025 Gross Domestic Product (GDP) growth projection downward to 3.3%, reflecting recent economic indicators and the central bank's assessment of the country's economic outlook. The adjustment comes after a period of robust growth, with the Composite State of the Economy Index showing a significant rebound in May [1].

The latest reading of the index indicates a 0.11% month-on-month increase in seasonally adjusted terms, following a -0.16% decline in April. This uptick was driven by improvements in goods exports, the job vacancy rate, and credit card purchases, as well as industrial production. However, declines in imports of consumption goods and production inputs, services revenue, services exports, and building starts contributed to a mixed economic picture [1].

On an annual basis, economic activity rose at a quicker rate of 1.1% in May, marking the best result since December 2024. This suggests that despite the recent slowdown in certain sectors, the broader economy remains resilient. The central bank's decision to cut the GDP growth projection reflects a more cautious outlook, likely influenced by ongoing global economic uncertainties and domestic challenges.

The Bank of Israel's move underscores the importance of staying vigilant in the face of potential headwinds, while also highlighting the need for continued economic monitoring and policy adjustments. Investors and financial professionals should closely follow future developments to gauge the impact of these changes on the Israeli economy and its growth prospects.

References:
[1] Focus-Economics. (2025, July 1). Israel: Economic Activity. Retrieved from https://www.focus-economics.com/countries/israel/news/economic-activity/israel-economic-activity-01-07-2025-composite-state-of-the-economy-index-bounces-back-in-may/