Weekly Report - October 26, 2026: Israel heads to the polls; Bank of Israel signals a pause in rate cuts; economic growth remains strong but uneven

ISRAEL - Report 26 Oct 2026 by Sani Ziv

Israel heads to the October 27 elections amid uncertainty over the outcome and renewed threats of military escalation. The final polls give Netanyahu's bloc around 50 seats, compared with approximately 69 for the Zionist opposition and Arab parties combined. However, political deadlock remains a central scenario.

On the economic front, the Bank of Israel kept its policy rate unchanged at 3.25%, adopting a more cautious tone. Its updated forecasts point to GDP growth of 5.6% in 2026 and 7.5% in 2027, largely reflecting production abroad rather than stronger domestic activity. We continue to expect rates to remain unchanged through 2027.

Economic indicators suggest continued expansion in Q3, led by high-tech manufacturing and services exports, although growth remains uneven. The labor market is still tight despite some improvement in labor supply. Meanwhile, inflation expectations have edged higher, and the shekel has weakened ahead of the elections, further reducing the likelihood of near-term monetary easing.

Now read on...

Register to sample a report

Register
Must have at least 8 characters
Sign-in
Forgot your password?
Copyright 2026 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.