Israel

Israel's FDI net inflows registered USD 7.6 billion in Q4 2025, a sequential decline from USD 8.3 billion in Q3 2025, reflecting a moderation in inbound capital flows following the post-October 2023 conflict period. The Bank of Israel has documented that new direct equity investments exceeded reinvested earnings over the prior decade, though this trend reversed in 2023 amid a global FDI contraction.

CEIC Data / Bank of Israel · 2026-05-22

The IMF's February 2026 Article IV mission noted that a rebound in private investment is a key driver of the projected 4.8 percent GDP growth for 2026, with pent-up consumption and improved business sentiment cited as supporting factors. The IMF also flagged that progress beyond the Gaza ceasefire and expanded Abraham Accords participation could generate additional trade and investment opportunities.

International Monetary Fund · 2026-02-05

Israel's inbound investment screening framework, established in October 2019 and updated in October 2022 to lower the foreign ownership threshold triggering committee review, remains operative; investments in regulated sectors such as banking, insurance, and defense require additional regulatory approval. The U.S. Department of State's 2025 Investment Climate Statement confirms that foreign and domestic investors are generally treated on a national treatment basis, with heightened scrutiny reserved for security-sensitive sources.

U.S. Department of State · 2026-05-22

The European Union–Israel Association Agreement came under active political pressure during the reporting window, with Amnesty International and a European Citizens' Initiative—exceeding one million signatures by mid-April 2026—calling on EU foreign ministers to suspend the agreement's trade privileges at the May 11 Foreign Affairs Council meeting. Germany's foreign minister publicly opposed suspension, characterizing it as 'inappropriate,' while Italy's position remained contested, leaving the agreement intact but under heightened scrutiny.

Amnesty International · 2026-05-11

The United States implemented a 15 percent tariff on Israeli goods as part of its broader global trade recalibration, with key sectors—including pharmaceuticals, semiconductors, energy products, and critical minerals—exempted; steel, aluminum, and automotive products remain subject to separate Section 232 measures. Israel's April 2025 announcement of its intention to eliminate all tariffs on U.S. imports was pending final Knesset approval as of the most recent reporting, with the U.S.-Israel agricultural trade agreement extended through December 31, 2026 to allow time for permanent modifications.

International Trade Administration / U.S. Federal Register · 2026-03-30

Israel's 'What's Good for Europe Is Good for Israel' import reform, which allows products compliant with European Union regulatory standards to enter the Israeli market without additional Standards Institution of Israel testing, continued phased implementation begun January 2025 and scheduled through January 2028. A proposed Amendment No. 21 to the Standards Law, introduced in November 2025, mirrors this model to further facilitate trade with the United States, signaling a broader regulatory convergence strategy.

Compliance & Risks · 2026-01-06

The IMF projects Israel's GDP growth to increase from 2.9 percent in 2025 to 4.8 percent in 2026, driven by pent-up private consumption and an investment rebound, while government consumption is expected to decline. Inflation is forecast to decelerate to slightly below 2 percent by mid-2026, supported by shekel appreciation and easing capacity constraints.

International Monetary Fund · 2026-02-05

Israel's central government deficit narrowed from 6.8 percent of GDP in 2024 to 4.7 percent in 2025 following consolidation measures, though it remains well above the pre-conflict average of approximately 2.5 percent. Public debt rose to 68.6 percent of GDP at end-2025, up from 60 percent at end-2022, with the draft 2026 budget targeting a deficit ceiling of 3.9 percent of GDP.

International Monetary Fund · 2026-02-05

FDI net inflows as a share of GDP stood at 2.73 percent in 2024 per World Bank data, reflecting continued investor engagement despite conflict-related headwinds. The Bank of Israel's research indicates Israel ranks favorably on FDI indicators relative to peer economies with comparable per-capita GDP, underscoring the economy's structural attractiveness to foreign capital.

World Bank / Bank of Israel · 2026-05-22

The IMF's 2026 Article IV mission recommended streamlining company registration procedures and reducing entry barriers in professional services to enhance competition and business dynamism, alongside accelerated infrastructure investment—particularly in transport—to keep pace with population growth. The mission also highlighted the need to monitor contingent liabilities arising from Israel's reliance on public-private partnerships for infrastructure delivery.

International Monetary Fund · 2026-02-05

The Tel Aviv Stock Exchange (TASE) shifted its trading week to Monday–Friday effective January 2026, aligning with international market conventions and reducing settlement friction for cross-border investors. Israel's legal and accounting frameworks are assessed by the U.S. State Department as transparent and conforming to international norms, though inflation-adjusted accounting practices diverge from U.S. Generally Accepted Accounting Principles (GAAP).

U.S. Department of State · 2026-05-22

A draft Communications Bill proposing a Local Content Requirement for digital streaming platforms had not passed the Knesset as of August 2025, representing a residual regulatory risk for foreign digital media operators. Israel has not appeared on the U.S. Special 301 Report or the Notorious Markets List since 2014, and ranked 15th globally in the World Intellectual Property Organization's (WIPO) 2024 Global Innovation Index.

U.S. Department of State / WIPO · 2026-05-22