Israel's Q1 GDP Growth Picks Up

The Israeli economy grew at an annualized rate of 3.4% in Q1 2025, just below market expectations of 3.5%, following a downwardly revised 1.9% expansion in the previous quarter.

Growth was primarily driven by a robust 8.7% increase in gross fixed capital formation, slightly above the 8.6% rise in Q4.

This was largely supported by a sharp acceleration in residential construction (28.4% vs 15.1%), while industrial investment growth slowed notably (1.5% vs 8.2%).

However, domestic demand showed signs of weakness.

Private consumption contracted by 5%, reversing a 4.1% increase in the previous quarter, while public spending also edged lower by 0.2% after a strong 8.8% rise.

On the external front, exports fell by 1.8%, following a surge of 10.4% in Q4, while import growth eased to 5% from 16%.

On a quarterly basis, the Israeli economy expanded by 0.8% in Q1 2025, up from a 0.5% increase in the final quarter of 2024.