Israel’s growth outlook dims under new U.S. tariff threats

The Israeli economy is expected to take a hit from the Trump administration’s proposed global tariff plan, with the Finance Ministry estimating a potential annual GDP loss of less than 0.5%, or under NIS 10 billion.

Despite the uncertainty around the final tariff rates, the ministry considers the expected impact moderate compared to forecasts for other countries, including the U.S. itself.

The Ministry of Finance had already been planning to revise its 2025 growth forecast downward due to better-than-expected GDP results for 2024. Initial estimates predicted 4.3% growth, but recent figures show 2024 growth at 1%, slightly above previous projections.

While the final revision will be announced by late May or early June, the tariff issue has made a reduction in the growth forecast inevitable.

 The Bank of Israel has already adjusted its 2025 forecast from 4% to 3.5%, while the IMF now predicts Israel’s economy will grow by 3.2%, an improvement from its earlier 2.7% forecast.