Israel’s Economic Miracle

The Bank of Israel’s forecast that the economy of the Jewish state will grow by 5.6 percent in 2026 and 7.5 percent in 2027 is newsworthy. When overseas production by multinational companies registered at Israel is excluded, the bank projects growth of 3.4 percent this year and 5.1 percent next year — still stellar. This growth comes even as Israel has spent years waging a multi-front war brought on by the worst massacre of Jews since the Holocaust.As the Israeli scribe Amit Segal puts it, “These are not the numbers of a country three years into a multi-front war. If the forecast holds, Israel would outgrow every economy in the OECD, war or no war.” Another commentator, Saul Sadka, notes that at this rate Israel’s economy “will leapfrog the Netherlands and Australia within the next 18 months.” Second-quarter growth, annualized, came in at 15.4 percent. The Bank of Israel expects more of the same ahead.The billionaire investor William Ackman, speaking in Israel on Thursday, shared that he feels “bullish” about the country’s economy and predicts that “there will be a trillion dollar market cap company that comes out of Israel. I would be surprised if not in the next five years, let alone the next 10.” He predicts that the elimination of the Iranian threat would deliver “a massive peace dividend in the region.”Mr. Ackman adds that “I believe Israel will become one of the best economies in the world. Israel’s drawback is its small population, but in the age of AI, this can actually become an advantage. What matters today is the concentration of talent within the country.” In 2024, the founder of Pershing Square Capital Management bought a five percent stake in the Tel Aviv Stock Exchange. This week, Hebrew University landed a $250 million donation.The Jewish state’s economic boom might be a miracle, but it is no fairy tale. Israelis, like everywhere else, are contending with high prices. Unlike everywhere else, the years of war put an extraordinary burden on those who serve, and brain drain is a growing concern, especially to those opposed to Prime Minister Benjamin Netanyahu, who will face voters next week. Israel’s booming economy, though, appears to be doing him no favors.That is ironic. During Mr. Netanyahu’s time as both prime minister and finance minister he pushed for the free market reforms — privatization of state enterprises, cuts in public spending and welfare, tax rate reductions, and capital market overhauls — that set the conditions for the unleashing of Israel’s animal spirits from what had been a collectivist and hidebound economic order. In this he followed the path blazed by Prime Minister Menachem Begin.The bullish assessment from the Bank of Israel comes just days after New York City’s comptroller, Mark Levine, backpedaled on a promise to buy Israel bonds. A former comptroller, Scott Stringer, tells our Luke Funk that the decision could fuel a “BDS movement that is antisemitic.” On Thursday Norway’s sovereign wealth fund, the world’s largest, reported a $30 billion loss after divesting from Israel. Anti-Zionism, it turns out, is bad business.

Israel’s Economic Miracle

Israel’s Economic Miracle

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