JERUSALEM, July 1 (Xinhua) -- The International Monetary Fund (IMF) has lowered its forecast for Israel's economic growth in 2026 to 3.5 percent, down from its previous 4.8 percent estimate.
In its annual report released Wednesday, the IMF said rising tensions and ongoing fighting in the Middle East continue to weigh on Israel's economy.
The IMF also expects inflation to increase in the short term, driven by supply constraints and higher global energy prices, despite the recent strengthening of the shekel.
The Israeli labor market is also under pressure because many reservist soldiers remain on military duty and fewer foreign and Palestinian workers are available, it added.
To support stronger growth, the IMF urged Israel to reduce budget deficits over time, improve worker productivity, and maintain monetary policies to keep inflation under control and prices stable.
