Calcalist: Israel's Economy Appears Strong But Hides a Persistent Deficit

SadaNews - The 2025 data published by the Central Bureau of Statistics in "Israel" shows a dual picture, where a quarter of a century of remarkable economic boom is met with a clear warning of signs of erosion in financial and demographic foundations.

The Israeli newspaper "Calcalist" focuses in its report on the "third part of the story" as the area of danger, indicating that the continued budget deficit above 5% of Gross Domestic Product for the third consecutive year is "not sustainable."

According to the Israeli newspaper, the government budget deficit stood at 5.2% of GDP according to the calculations of the Central Bureau of Statistics, compared to 4.7% according to the data from the general accountant, reflecting a gap of nearly 11 billion shekels (about 3.5 billion dollars).

The newspaper emphasizes that the Central Bureau of Statistics adopts international standards and is the official entity relied upon by international institutions, including credit rating agencies.

"Calcalist" concludes that the repeated deficit exceeding 5% of GDP for a third year raises questions about the financial path, warning that a government that "does not correct its financial path or implement deep reforms" may lose the conditions that previously enabled the economy to achieve growth.

Warnings and Risks

The newspaper points out that the conclusion of the annual presentation of the Central Bureau of Statistics with deficit data "did not come without reason," but rather in the context of previous warnings from the chief economist of the bureau and the International Monetary Fund regarding "unsustainability" and the difficulty of managing an expansive spending policy without controls.

"Calcalist" notes that the danger is not an immediate collapse, but rather a gradual "erosion" in growth drivers if the financial path continues without adjustment.

Demographics and Production

In addition to the budget deficit, the data reflects a rapidly changing demographic situation, with an increase in the weight of older age groups that require a broader workforce base to finance the healthcare and social services they are increasingly demanding.

Conversely, the weight of groups with low participation rates in the labor market is rising, which pressures the taxpayer base and makes it smaller.

"Calcalist" reports that the continued weakness of integration of certain groups into the labor market, a decline in the quality of basic education, and rising crime rates affecting economic potential are all factors that could lead to "erosion of the base of future growth."

Despite Israel recording economic growth of nearly 3% in 2025, and a recovery in investments and exports after a less intense period of military confrontations, the Israeli newspaper asserts that expectations for growth exceeding 5% in 2026 remain contingent on the government's ability to address structural imbalances.

"Calcalist" stresses that the equation is not about reproducing a previous "miracle," but about maintaining what has been achieved, amid a recurring deficit, increasing demographic pressures, and warnings of a financial path that may weaken the Israeli economy's ability to continue growing at the rates it has seen over the past quarter-century.