\u201cIsrael has continued its strong recovery from the chaos of 2023,\u201d The Economist said, adding that Israel has been among the best performers when it comes to its local stock market.<\/p>\n
\u201cIn the past year, the share price of the country\u2019s most valuable listed company, Bank Leumi, has risen by around 70%,\u201d The Economist added.<\/p>\n
The Economist\u2019s ranking for the \u201ceconomy of the year\u201d is based on an overall score evaluating five economic and financial performance indicators in a given year \u2013 core inflation, inflation breadth, Gross Domestic Product (GDP), employment and stock market performance.<\/p>\n
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\t\t\t\tBy signing up, you agree to the terms<\/a><\/p>\n Israel is also one of the best-performing equity markets in local currency terms in the 2025 ranking after Slovenia, the Czech Republic and South Korea.<\/p>\n \t According to a recent forecast<\/a> by the Organisation for Economic Co-operation and Development (OECD), a group of countries with developed economies, Israel\u2019s economy is expected to rebound this year, and grow at a rate of 3.3 percent. Global GDP, by comparison, is expected to grow by around 3% this year, The Economist projected in the annual ranking.<\/p>\n Israel\u2019s economy expanded at a slower pace of 1% in 2024 as the wars with terror groups Hamas in Gaza, and Hezbollah in Lebanon, ballooned government spending on military and civilian needs, taking a toll on the country\u2019s exports and investments.<\/p>\n Meanwhile, Israel\u2019s annual inflation rate in recent months moved within the government\u2019s target range of 1% to 3%, and slowed<\/a> to 2.4% in November.<\/p>\n Israel\u2019s economic resilience has helped lead Tel Aviv share indices to record highs this year amid the raging multifront wars, outperforming the world\u2019s major stock indexes. Similarly, the shekel has strengthened against both the dollar and the euro despite an economy strained by ballooning war costs and a growing debt burden.<\/p>\n In 2024, the Tel Aviv Stock Exchange (TASE) was already the world\u2019s fastest-rising stock market \u2014 after taking a big plunge at the outbreak of war with the Hamas-led attack on October 7, 2023.<\/p>\n Israel\u2019s main stock indexes continued to climb this year, with the benchmark TA-125 index gaining 49% and the TA-35 index of blue-chip companies soaring more than 50%.<\/p>\n The performance of Israel\u2019s main share indices, a barometer for a country\u2019s economic performance, also served as a magnet for attracting foreign investment inflows back to the local stock market, according to a TASE report published on Monday.<\/p>\n Foreign investors flocked to Israeli markets to buy shares starting in mid-2024 after a sell-off at the outbreak of the war in 2023 and as fighting intensified in the first six months of the following year, said Yuval Tsuk, an economist at TASE\u2019s research unit.<\/p>\n \t As of September 2025, the value of holdings by foreign financial institutions in Tel Aviv stocks, excluding dual-listed stocks, reached a historic record of $19.2 billion, more than double the figure before the outbreak of war, according to TASE data. In the first nine months of the year, overseas investors poured $2.4 billion into the local capital market. The lion\u2019s share, or 80% was from North American investors, and the remainder was from Europe.<\/p>\n In the TASE report, Tsuk said positive security developments for Israel led to the steady influx of billions of shekels by foreign investors over the past year into investment vehicles that track local main stock indexes.<\/p>\n Investor optimism that was stirred by the targeted strikes last year that eliminated most of the Hezbollah leadership, including its leader Hassan Nasrallah, and reasserted Israel\u2019s military primacy, got another boost following Israel\u2019s campaign against Iran in June.<\/p>\n Israel\u2019s military achievements against Iran\u2019s nuclear program \u2014 alongside the already weakened Iranian proxies in Lebanon, Syria and Gaza \u2014 reduced the market perception of risks to Israel\u2019s security and economy, the report said.<\/p>\n In addition, the resilience of the local economy alongside strong business results by Israeli retail companies and banks also made investment in the local capital market more attractive, Tsuk said.<\/p>\n Overall, foreign institutional investors account for about 10% of the value of public holdings in stocks listed on the TA-125 stock index and about 11% of the value of public holdings in the TA-35 index.<\/p>\n Financial sector stocks, including the country\u2019s five largest banks and insurance companies, attracted most of the foreign investor interest, accounting for about 70% of their total holdings as of the end of September. Stocks of local real estate companies, including Azrieli and Melisron, accounted for about 12% of foreign investor holdings.<\/p>\n
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\n\t\tIllustrative: People shopping at the Azrieli mall in Tel Aviv, during the Municipal Elections, February 27, 2024. (Flash90)<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/12\/iStock-1476123691-e1686847822176-640x400.jpg\")
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\n\t\tIllustrative: Skyscrapers in Tel Aviv. March 2023. (Anna Arinshtein via iStock by Getty Images)<\/p>\n
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