Calcalist, a business and economics newspaper and website, wrote on Monday that the recent war with Iran has set the regime's economy back by an entire year and caused negative growth recorded in the second quarter of 2025.
The report cited official data from the regime's statistics center, indicating a real decline in GDP by 3.5 percent compared to the previous quarter and about one percent in simple quarterly calculations.
“Dependence on imports remains high and any sanctions or cancellation of trade agreements could deal Israel’s economy a heavier blow,” it said, adding that per capita output has also decreased by 4.4 percent given the nearly 2 percent annual population growth.
According to the report, the commercial sector was the hardest hit, which faced a 7-percent drop in its output, a decline nearly twice as steep as the overall growth slowdown. The severity of this decline is very worrying as J.P. Morgan estimated the contraction of the Israeli economy at only 0.5% in its quarterly forecast but is expected to revise its previous forecast of 2.6 percent overall growth in 2025.
The Israeli economy had seen a downturn ever since the regime of Prime Minister Benjamin Netanyahu launched a genocidal war on Gaza, but the unprovoked war of aggression against Iran in mid-June cost the regime an estimated 6 billion dollars while economists braced for slowed growth and widening deficits.
Two consecutive quarters of negative GDP growth would lead the regime to a recession, which analysts believe is imminent as the current situation keeps living standards stagnant and delays the economic recovery .
The Calcalist report concludes by warning that it should not be forgotten that the vulnerability of the Israeli economy to sanctions or the cancellation of trade agreements – especially with Europe – remains very high and could have wider consequences for the regime’s future.
MNA