# Israel's war bill lands as the shekel hits a 30-year high
> Q1 GDP shrank 3.3% from the Iran war, but the ceasefire sends the currency to a 1993 peak and ratings outlooks to stable — even as Smotrich fights a record defence budget

**Meta:** type: story · date: 2026-06-24 · heads: L'argent de qui, Comment la vie change · 12 takes · 1 lenses · 3 regions

## Summary

[Israel](/fr/entity/israel)'s economy contracted 3.3% annualised in Q1 2026 under the [Iran war](/fr/n/iran-us-ceasefire-mou),
with consumer spending down 4.7% and exports down 3.7%. The Bank of Israel cut its 2026
growth forecast to 3.8% from 5.2% and lowered the policy rate to 3.75%; inflation sits at
1.9%. Finance Minister Bezalel Smotrich is battling a record defence bill — a 2026 defence
budget around NIS 112bn ($34bn) inside a cumulative two-year war cost he puts near NIS
250bn ($77bn) — while the Knesset raised the deficit ceiling toward ~5% of GDP. Yet the
ceasefire produced a sharp rebound: the shekel reached a roughly 30-year high near 3.06 to
the dollar, the TASE recovered, and Moody's and S&P moved their outlooks to stable. The
rally and the bill arrive together, the second waiting behind the first.

## By the numbers

- −3.3% — Q1 2026 GDP, annualised (consumption −4.7%, exports −3.7%).
- 3.8% — Bank of Israel's cut 2026 growth forecast (from 5.2%); rate 3.75%.
- ~NIS 250bn (~$77bn) — Smotrich's cumulative two-year war-cost figure.
- ~3.06/$ — shekel at a roughly 30-year high; ~20% appreciation.
- stable — Moody's (Baa1) and S&P (A) outlooks after the ceasefire.

## Why it matters

[Benjamin Netanyahu](/fr/entity/benjamin-netanyahu) heads into an autumn vote with a contradiction: financial markets
price a peace dividend while the budget books a record defence bill and a wider deficit.
The currency strength flatters the recovery; the tax and spending reckoning Smotrich is
fighting lands later, exposing whoever holds the finance ministry after the election.

## What to watch

- Passage of the 2026 budget and the final deficit ceiling.
- Whether the shekel's strength holds or reverses on any ceasefire wobble.
- Reconstruction costs in the north and south feeding the deficit.
- Any follow-through ratings action from S&P or Fitch.

## Regional takes (batched by bias / lens)

### unlabelled
- **Bank of Israel** (Israel, en) — The central bank's own decision and accompanying forecast — cutting the 2026 growth projection to 3.8% from 5.2%, lowering the policy rate to 3.75%, and citing the Iran war's drag against post-ceasefire recovery.
  Source: https://www.boi.org.il/en/communication-and-publications/press-releases/5-1-25-en/
- **Globes** (Israel, he) — Markets desk reads a 'peace dividend': the shekel at a roughly 30-year high near 3.06/$, a ~20% appreciation, with the TASE rebounding as the ceasefire removes the war-risk premium — the optimistic counterpoint to the GDP contraction.
  > "The shekel is at its strongest against the dollar in 30 years as the ceasefire lifts the war-risk premium."
  Source: https://en.globes.co.il/en/article-shekel-at-30-year-strongest-against-dollar-1001539854
- **Calcalist** (Israel, he) — Business daily foregrounds the fiscal hangover: a record defence budget, a widened deficit ceiling and future tax pain — arguing the currency rally masks a structural bill that lands after the markets celebrate.
  > "Behind the rally, a record defence budget and a widened deficit point to tax rises ahead."
  Source: https://www.calcalistech.com/ctechnews/article/zl7ffa8d9
- **Bloomberg** (United States, en) — Global-investor lens: Moody's lifting Israel's outlook to stable as conflict risks recede, framing the de-risking from a foreign-capital standpoint rather than the domestic ledger.
  > "Moody's raises Israel's credit outlook to stable as conflict risks recede."
  Source: https://www.bloomberg.com/news/articles/2026-01-30/israel-credit-outlook-raised-by-moody-s-as-conflict-risks-recede
- **Investing.com / Reuters** (Global, en) — 
  Source: https://www.investing.com/news/economic-indicators/israel-q1-gdp-shrinks-33-annualised-as-iran-war-weighs-4694519
- **Times of Israel (BoI growth)** (Israel, en) — 
  Source: https://www.timesofisrael.com/bank-of-israel-slashes-growth-prospects-as-iran-war-takes-toll-on-economy/
- **Times of Israel (rate cut)** (Israel, en) — 
  Source: https://www.timesofisrael.com/in-bold-move-central-bank-cuts-interest-rates-for-2nd-straight-time-after-ceasefire/
- **Times of Israel (Smotrich budget)** (Israel, en) — 
  Source: https://www.timesofisrael.com/unveiling-2026-budget-smotrich-fumes-at-excessive-defense-spending-mulls-tax-cuts/
- **Times of Israel (deficit vote)** (Israel, en) — 
  Source: https://www.timesofisrael.com/knesset-passes-5-1-deficit-and-spending-hike-amid-iran-war-in-first-of-3-votes/
- **Times of Israel (Moody's stable)** (Israel, en) — 
  Source: https://www.timesofisrael.com/moodys-boosts-israels-credit-outlook-to-stable-as-ceasefires-in-gaza-lebanon-hold/
- **Globes (war cost)** (Israel, en) — 
  Source: https://en.globes.co.il/en/article-smotrich-war-has-already-cost-israel-nis-9b-1001536400
- **Breaking Defense** (United States, en) — 
  Source: https://breakingdefense.com/2026/03/israel-approves-45b-defense-budget-as-iran-war-rages/

## Across the graph
- Related: [[netanyahu-coalition-exposure]], [[iran-us-ceasefire-mou]], [[idf-postwar-strain]]
- Entities: Benjamin Netanyahu, Israel

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Canonical: https://rbtfl.xyz/fr/n/israel-war-economy-bill