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Israel has climbed into the world’s 25 largest economies, overtaking Sweden despite years of war and regional instability, according to new figures from the International Monetary Fund.
The country’s economy is expected to reach $747 billion (£570 billion) by the close of 2026, placing it 25th globally, up from 27th last year.
Britain remains the world’s fifth-largest economy, with GDP of $4.27 trillion, behind the United States, China, Germany and Japan.
In regional rankings, Israel is the Middle East’s third-largest economy, behind Turkey ($1.82 trillion) and Saudi Arabia ($1.34 trillion), but almost $100billion ahead of the United Arab Emirates ($661 billion) and comfortably above Qatar ($203 billion).
Israel’s projected GDP of $747 billion is also greater than the combined economic output of Iran and Iraq, underlining its economic strength despite its far small population and the cost and disruption caused by years of conflict. The country has allocated approximately $46 billion (£35 billion) to defence in 2026.
Much of the country’s long-term success rests on its concentration of technology companies, scientific research and international investment.
Israel is a world leader in research and development, spending approximately 6.3 percent of GDP on research and development, more than twice that of the UK and substantially ahead of the United States. Its strengths include cybersecurity, artificial intelligence, medical technology and water management.
Dr Alon Stopel, chairman of the Israel Innovation Authority, said in May 2026: “Israel’s greatest advantage has never been the size of its market or its natural resources, but rather its ability to think differently, take risks, and turn breakthrough technologies into reality.”
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