Israel’s Economy Set to Grow Faster Than the Global Average
Cormann praised the strength of Israel’s economy and its thriving tech sector, noting that the OECD expects Israel to post growth in the coming year that outpaces both the global average and that of other OECD member states.
Also present at the meeting were National Security Council head Tzachi Hanegbi, National Economic Council Chairman Professor Avi Simhon, and Israel’s Ambassador to the OECD, Shay Cohen.
A Reversal from Last Year’s Outlook
The meeting follows a sharp downgrade of Israel’s growth forecast by the OECD in April of last year. At the time, the organization projected economic growth of just 0.6% in 2024, alongside negative per capita growth. The 2025 forecast was cut from 4.6% to 2.4%. Inflation expectations were also raised to 3.1% in 2024 and 3.6% in 2025—well above the government’s target range for price stability.
Economic Resilience Despite War
The OECD isn’t alone in expressing optimism about Israel’s economy. International credit agency Fitch Ratings announced yesterday that it had reaffirmed Israel’s credit rating at “A” with a “Negative” outlook. From an economic standpoint, the rating reflects Israel’s ability to maintain stability in the face of regional conflict.
Strong Security, but Internal Stability Still Needed
Fitch noted Israel’s impressive resilience during the recent war, particularly in light of the diminishing influence of Iran across the region. Israel has successfully defended itself and lowered the threat from external enemies.
At the same time, the agency pointed to domestic political challenges, including internal divisions, ongoing disputes over judicial reforms, and a lack of political consensus. If unresolved, these issues could undermine governance and public confidence, potentially impacting Israel’s future credit standing.
While the OECD itself does not assign credit ratings, its reports are often factored into assessments by global rating agencies. A favorable outlook from the OECD could positively influence Israel’s rating trajectory moving forward.
