Israel’s economy prospers despite years of war, but prices worry voters

Tech is driving the economy, and investments are flowing in. But food costs are rising and debt is growing, making the economy a concern for many voters.

High-rise buildings are seen near a beach in Tel Aviv, Israel, on June 16, 2019 [Amir Cohen/Reuters]

After three years of Israel’s multi-front war in the Middle East, it would be no surprise if this month’s Knesset elections were taking place against the backdrop of an economy in dire straits.

Instead, Israel’s economy is – by many measures – flourishing.

After slowing sharply in the initial aftermath of the Hamas-led October 7, 2023 attacks and Israel’s genocidal war on Gaza, Israel has rebounded to become one of the fastest-growing advanced economies in recent years.

Gross domestic product (GDP) grew 2.9 percent in 2025, picking up from a 1 percent expansion in 2024, and 3.2 percent in the first half of this year, according to government figures.

The Bank of Israel has forecast 4 percent growth for the whole of 2026 and 5.5 percent growth in 2027 – projections that far exceed the outlooks for major economies such as the United States, United Kingdom, France, Canada, and Japan.

Over the past three years, the shekel has strengthened against the US dollar, hitting a three-decade high in May, and Israel’s stock market has surged, with the benchmark TA-125 up more than 110 percent.

Meanwhile, unemployment stands at 2.8 percent, while inflation is modest at 1.5 percent.

Against this relatively rosy economic backdrop, campaigning for the October 27 election has been dominated by national security, with Prime Minister Benjamin Netanyahu, leader of the right-wing Likud party, and retired general Gadi Eisenkot, head of the centrist Yashar, each claiming to be most qualified to keep Israelis safe.

An election advertisement is seen in Ramat Gan, Israel on September 23, 2026 [Jack Guez/AFP]

Driving Israel’s striking economic resilience has been a booming tech sector largely insulated from its conflicts spanning Gaza, Lebanon, Syria, Iraq, Iran and Yemen.

Despite being on a war footing since October 2023, Israel has attracted record levels of investment in tech, the driver of about one-fifth of economic activity, amid the frenetic global rollout of artificial intelligence (AI).

Total direct foreign investment hit a record $26.2bn last year, up 78 percent from 2024, led by US tech giants Alphabet and Palo Alto Networks’ record-breaking acquisitions of Israeli cybersecurity firms Wiz and CyberArk, respectively.

Foreign capital has continued to flood into the country this year, with inflows reaching a quarterly record of $14.1bn in the January-March period, according to government figures.

Along with prospering from the global AI boom, Israel’s tech scene has benefitted from its close ties to the local defence sector, which has ramped up orders from hundreds of startups supplying everything from radar systems to communications platforms and anti-drone technology.

While Israel’s economy has bounced back in part due to robust employment and wage growth, its resilience is primarily an “export-driven story that reflects strong global technology demand, particularly in areas where Israel – and multinational firms operating from Israel – is globally competitive, such as cybersecurity and artificial intelligence,” said Keren Uziyel, a senior analyst for the Middle East and Africa at the Economist Intelligence Unit (EIU).

“Interest in Israel’s technology goods and services is driving high levels of FDI and venture capital fundraising, and boosting the capital markets, which in turn is having significant wealth effects and boosting government revenue,” Uziyel told Al Jazeera.

People walk near high-rise buildings in the high-tech business area of Tel Aviv, Israel May 15, 2017 [Amir Cohen/Reuters]

But Israel’s military campaigns have come at an enormous cost to the public purse.

In March, the Bank of Israel estimated that Israel’s war costs to date had reached approximately 350 billion shekels ($114.6bn) – a figure not including the then recently-launched Iran war.

Military expenditures are on track to rise substantially in the coming years as Israeli leaders double down on “national security”.

Netanyahu, whose right-wing coalition has cast security as “the foundation of everything else”, has pushed to raise the annual defence budget to 183 billion shekels ($60bn), equivalent to roughly 9 percent of GDP.

If passed, the budget would raise military spending by two and a half times what it was before October 7.

Outgoing opposition leader Yair Lapid has backed an expanded defence budget, but has clashed with Netanyahu about how to fund it.

Though security has dominated the run-up to the election, opinion polling suggests that Israelis also view the economy as a key concern.

In an opinion poll released by the Israel Democracy Institute last month, 38 percent of Jewish Israelis and 46 percent of Palestinian citizens of Israel – who make up about 20 percent of the population – chose the economy and the cost of living as the most important or second-most important election issue.

Israel’s high cost of living, in particular, has long been a source of public discontent.

Israel has for years ranked among the most expensive countries in the Organisation for Economic Co-operation and Development (OECD), a dynamic economists attribute to the country’s limited trade relations with its neighbours and cumbersome regulations.

Though Israel’s overall rate of inflation has been modest, food prices have risen at a faster pace, increasing 8 percent between the start of 2024 and mid-2026, according to consumer advocacy group Lobby 99.

“People are worried about the economy but not so much about the macroeconomic situation, more so on their personal perspectives, especially cost of living,” Ayal Kimhi, vice president of the Shoresh Institution for Socioeconomic Research in Tel Aviv, told Al Jazeera.

“However, the security situation dominates the public discourse for obvious reasons, so I do not think the economy will play a major role in the vote,” Kimhi said.

“Some parties do not even bother presenting a vision or an agenda,” he added.

“Other parties do not differ much about economic issues.”

An Israeli man tends to his shop in Haifa, Israel, on June 24, 2025 [Florion Goga/Reuters]

While Israel’s headline economic figures are impressive, they come with caveats attached.

Economists note that while Israel’s economy has grown much faster than its peers, GDP has been boosted in part by the country’s usually high population growth, which has averaged nearly 2 percent over the past decade.

Israel’s growth trajectory has also taken a hit despite the expansion, with the Bank of Israel estimating an accumulated loss of output through the end of 2025 equivalent to 8.6 percent of annual GDP.

Joseph Zeira, a professor of economics at the Hebrew University of Jerusalem, said the country’s economic performance has “not been great at all” considering that growth has consistently lagged the pre-conflict trend since late 2023.

“Actual living standards depend on the area,” Zeira told Al Jazeera, adding that Israelis are grappling with “higher prices, or rather lower real wages and incomes”, and deteriorating public services.

“The only improvement is some decline in housing prices due to a vast wave of construction in recent years,” he said.

The long-term health of Israel’s public finances is another concern.

While Israel’s debt-to-GDP ratio of about 68 is far below that of peers such as the US, the UK, France, and Italy, the gap between government revenue and spending has grown rapidly over the past three years.

In its latest annual report, the Bank of Israel said it was “essential” for the government to “restore orderly budgetary processes” and implement “credible measures” to reduce the public debt.

Other long-term challenges include boosting labour participation among ultra-Orthodox Jewish men – whose refusal to do military service has become a major election issue – and Arab women (among Palestinian citizens of Israel), both of whom are employed at much lower rates than the general population.

“The cost of the military campaigns and mobilisation has severely strained public finances,” Omer Moav, a professor of economics at the University of Warwick and at Reichman University, told Al Jazeera.

“Deficits and national debt have expanded significantly, making current spending trajectories unsustainable without fiscal consolidation,” Moav said.

“The next government is facing a huge challenge.”

Regardless of who prevails in the election, economists say, Israel’s economic prospects will in large part hinge on whether conflict in the region escalates or subsides.

“We expect growth to reach around 4 percent in 2026 and to exceed this level in 2027,” said Uziyel, the EIU analyst.

“However, significant downside risks to growth remain should conflicts in Gaza, Iran, or on the Lebanon front resume.”

“The outlook depends greatly on the security situation,” said Kimhi of the Shoresh Institution for Socioeconomic Research.

“If we are able to put an end to the war and reduce military spending, the future could be bright.”

科技正在推动经济发展，投资也源源不断地涌入。但食品价格上涨，债务不断增加，这使得经济成为许多选民关注的问题。

2019年6月16日，以色列特拉维夫海滩附近可见高层建筑。[Amir Cohen/路透社]

以色列在中东经历了三年多线作战之后，如果本月举行的以色列议会选举是在经济陷入困境的背景下进行的，那也不足为奇。

相反，从很多方面来看，以色列的经济正在蓬勃发展。

在哈马斯领导的 2023 年 10 月 7 日袭击事件和以色列对加沙发动种族灭绝战争之后，以色列经济增长一度急剧放缓，但近年来已反弹成为增长最快的发达经济体之一。

根据政府数据，2025年国内生产总值（GDP）增长2.9%，高于2024年的1%增幅和今年上半年的3.2%增幅。

以色列银行预测，2026 年全年经济增长率为 4%，2027 年经济增长率为 5.5%——这一预测远远超过美国、英国、法国、加拿大和日本等主要经济体的预期。

过去三年，谢克尔对美元走强，5 月份达到三十年来的最高水平，以色列股市也大幅上涨，基准 TA-125 指数上涨超过 110%。

与此同时，失业率为2.8%，通货膨胀率温和，为1.5%。

在相对乐观的经济背景下，10 月 27 日的选举竞选活动主要围绕国家安全问题展开，右翼利库德集团领导人、总理本雅明·内塔尼亚胡和中间派亚沙尔党领导人、退役将军加迪·艾森科特都声称自己最有资格保障以色列人的安全。

2026年9月23日，以色列拉马特甘的一则选举广告。[杰克·格兹/法新社]

以色列经济展现出惊人的韧性，这主要得益于其蓬勃发展的科技行业，该行业在很大程度上免受加沙、黎巴嫩、叙利亚、伊拉克、伊朗和也门等地冲突的影响。

尽管自 2023 年 10 月以来以色列一直处于战争状态，但在人工智能 (AI) 在全球范围内疯狂推广的背景下，以色列吸引了创纪录的科技投资，科技是该国约五分之一经济活动的驱动力。

去年，外国直接投资总额达到创纪录的 262 亿美元，比 2024 年增长 78%，这主要得益于美国科技巨头 Alphabet 和 Palo Alto Networks 分别以创纪录的收购额收购了以色列网络安全公司 Wiz 和 Cyber​​Ark。

据政府数据显示，今年以来，外资持续涌入该国，1月至3月期间的外资流入量达到创纪录的141亿美元。

以色列的科技行业不仅受益于全球人工智能的蓬勃发展，还得益于其与当地国防部门的紧密联系。国防部门增加了来自数百家初创企业的订单，这些企业提供的产品和服务涵盖从雷达系统到通信平台和反无人机技术等各个方面。

经济学人智库 (EIU) 中东和非洲高级分析师 Keren Uziyel 表示，虽然以色列经济的复苏部分归功于强劲的就业和工资增长，但其韧性主要是一个“出口驱动的故事，反映了强劲的全球技术需求，尤其是在以色列以及在以色列运营的跨国公司具有全球竞争力的领域，例如网络安全和人工智能”。

乌兹耶尔告诉半岛电视台：“对以色列科技产品和服务的兴趣正在推动高水平的外国直接投资和风险投资融资，并提振资本市场，这反过来又产生了显著的财富效应，并增加了政府收入。”

2017年5月15日，人们在以色列特拉维夫高科技商业区的高层建筑附近行走。[Amir Cohen/路透社]

但以色列的军事行动给公共财政带来了巨大的成本。

今年 3 月，以色列银行估计，以色列迄今为止的战争成本已达到约 3500 亿谢克尔（1146 亿美元）——这一数字还不包括当时刚刚开始的伊朗战争。

未来几年，随着以色列领导人加倍重视“国家安全”，军费开支预计将大幅增长。

内塔尼亚胡领导的右翼联盟将安全视为“一切的基础”，并推动将年度国防预算提高到 1830 亿谢克尔（600 亿美元），约占国内生产总值的 9%。

如果获得通过，该预算将使军费开支比 10 月 7 日之前增加两倍半。

即将卸任的反对党领袖亚伊尔·拉皮德支持扩大国防预算，但他与内塔尼亚胡在如何筹集资金的问题上存在分歧。

尽管安全问题一直是选举前的焦点，但民意调查显示，以色列人也将经济视为一个关键问题。

以色列民主研究所上个月发布的一项民意调查显示，38%的以色列犹太人和46%的以色列巴勒斯坦公民（约占以色列人口的20%）认为经济和生活成本是最重要或第二重要的选举议题。

以色列高昂的生活成本，尤其是高昂的生活成本，长期以来一直是公众不满的根源。

多年来，以色列一直是经济合作与发展组织（OECD）成员国中生活成本最高的国家之一，经济学家认为这是由于该国与邻国的贸易关系有限以及繁琐的法规造成的。

据消费者权益倡导组织 Lobby 99 称，尽管以色列的整体通货膨胀率较为温和，但食品价格上涨速度更快，从 2024 年初到 2026 年年中上涨了 8%。

“人们担心经济，但不太担心宏观经济形势，更关心的是个人层面，尤其是生活成本，”特拉维夫 Shoresh 社会经济研究所副总裁 Ayal Kimhi 告诉半岛电视台。

“然而，由于显而易见的原因，安全形势主导了公众讨论，所以我认为经济不会在投票中发挥重要作用，”金希说。

“有些政党甚至懒得提出愿景或纲领，”他补充道。

“其他各方在经济问题上并没有太大分歧。”

2025年6月24日，一名以色列男子在以色列海法照料他的店铺。[Florion Goga/路透社]

虽然以色列的总体经济数据令人印象深刻，但其中也存在一些问题。

经济学家指出，虽然以色列经济增长速度远超其他国家，但其GDP增长部分得益于该国通常较高的人口增长率，过去十年平均人口增长率接近2%。

尽管经济扩张，但以色列的增长轨迹也受到了打击。以色列银行估计，到 2025 年底，累计产出损失相当于年度 GDP 的 8.6%。

耶路撒冷希伯来大学经济学教授约瑟夫·泽拉表示，考虑到自 2023 年底以来经济增长一直落后于冲突前的趋势，该国的经济表现“一点也不好”。

“实际生活水平取决于地区，”泽拉告诉半岛电视台，并补充说，以色列人正在应对“更高的物价，或者更确切地说是更低的实际工资和收入”，以及日益恶化的公共服务。

他说：“唯一的改善之处在于，由于近年来大规模的建筑活动，房价有所下降。”

以色列公共财政的长期健康状况是另一个令人担忧的问题。

虽然以色列的债务与GDP之比约为68，远低于美国、英国、法国和意大利等同级别国家，但过去三年里，政府收入和支出之间的差距迅速扩大。

以色列银行在其最新年度报告中表示，政府“必须”恢复有序的预算流程，并实施“可信的措施”来减少公共债务。

其他长期挑战包括提高极端正统犹太男性（他们拒绝服兵役已成为一个主要的选举议题）和阿拉伯女性（以色列巴勒斯坦公民）的劳动参与率，这两个群体的就业率都远低于普通人群。

“军事行动和动员的成本严重影响了公共财政，”华威大学和莱希曼大学的经济学教授奥默·莫阿夫告诉半岛电视台。

“赤字和国债大幅增加，如果不进行财政整顿，目前的支出轨迹是不可持续的。”莫阿夫说。

“下一届政府将面临巨大挑战。”

经济学家表示，无论谁在选举中获胜，以色列的经济前景在很大程度上将取决于该地区的冲突是升级还是缓和。

“我们预计 2026 年增长率将达到 4% 左右，2027 年将超过这一水平，”经济学人智库分析师乌兹耶尔表示。

“然而，如果加沙、伊朗或黎巴嫩前线的冲突再次爆发，经济增长仍面临重大下行风险。”

“前景很大程度上取决于安全形势，” Shoresh 社会经济研究所的 Kimhi 说。

“如果我们能够结束战争并减少军费开支，未来将会一片光明。”