Israel
Israeli economy surges to third place in 2025 global ranking
The Economist’s annual performance assessment lifted Israel three places above last year’s position
December 22, 2025 13:58
The Economist’s annual performance assessment lifted Israel three places above last year’s position
December 22, 2025 13:58Israel had the third best performing economy in 2025, according to an end-of-year ranking by The Economist.
“Israel has continued its strong recovery from the chaos of 2023,” the British weekly stated in its annual report, concluding that Israel had moved up three places from last year to take third spot behind Portugal and Ireland.
The Economist compared data across five indicators – inflation, “inflation breadth”, gross domestic product (GDP), jobs and stock market performance – to determine the “economy of the year”, focusing on what they describe as 36 “mostly rich” countries.
Israel’s economic triumph was largely down to its stock market performance, The Economist explained: “Nowhere has done better (in local-currency terms) than Israel. In the past year the share price of the country’s most valuable listed company, Bank Leumi, has risen by around 70 per cent.”
The welcome news comes after significant economic turbulence following October 7.
In February 2024 it was reported that Israel’s economy had shrunk by nearly 20 per cent in the last three months of 2023, according to official figures.
The country’s GDP was “directly affected” by the October 7 massacre and subsequent conflict in Gaza, the Central Bureau of Statistics said.
Analysts predicted a contraction of around 10 per cent as a consequence of the war with Hamas, which took a toll on consumer spending, trade and investment, but preliminary figures showed a 19.4 per cent drop off in Israel’s annual GDP.
However by April, things were already looking up. During a visit to Jerusalem, the Secretary-General of the Organisation for Economic Co-operation and Development (OECD) offered a positive outlook for Israel's economic future, saying that the organisation expected Israel’s economic growth in 2025 to surpass both the global average and the performance of other OECD member states.
More good news came in November, when it was reported that trade between the UK and Israel rose substantially last year, despite the British government’s increasing condemnation of the Gaza War and the growing traction of boycott campaigns.
Official figures released by the UK’s Department for Business and Trade showed that total trade in goods and services between the two nations amounted to £6.2 billion in the year to June 30 2025.
This represented a 3.2 per cent, or £218 million, increase over the period and placed Israel 42nd on the list of the UK’s largest trading partners, roughly equivalent to Mexico, Hungary and Finland.
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