The Israeli government is cautiously optimistic about the country's economic recovery by 2025, despite current tensions linked to the conflicts in Gaza and Lebanon. This encouraging outlook was detailed on Tuesday by Shmuel Abramzon, chief economist of the Ministry of Finance, during an interview with Bloomberg.
Official forecasts anticipate significant GDP growth of 4.3% for 2025, a considerable jump from the modest 0.4% expected in 2024. This projection is based on several positive indicators observed in recent months: the strengthening of the shekel since the beginning of October, the rise in the Tel Aviv Stock Exchange, and the fall in insurance costs for Israeli sovereign debt.
This newfound confidence is largely explained by the military successes against Hezbollah and the growing hope of a ceasefire with the Lebanese group. However, Abramzon remains cautious: “There are still major uncertainties to be resolved”, he underlines, specifying that economic improvement “will depend on the outcome on the security front”. On the budgetary level, the Netanyahu government is confident in its ability to pass the 2025 budget without major changes in the Knesset. “The parliamentary process is always a bit tricky with negotiations,” admits Abramzon, “but in the end it’s a coalition parliament over which the cabinet has quite strong control.” The budget plan projects a fiscal deficit of 4.4% of GDP for 2025, a marked improvement on the around 8% expected in 2024 – a year marked by soaring war spending and a slowdown in many economic sectors. To achieve this goal, the 2025 plan includes a package of tax measures and spending cuts totaling around 35 billion shekels ($9.6 billion).
This economic roadmap demonstrates the Israeli government's desire to quickly return to the path to growth, while recognizing that this recovery remains closely linked to the evolution of the security situation in the region.
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