Israel in May 2026: the most important developments in economy
Israel's economy in May 2026 was shaped by the war with Iran, which entered its eleventh week. Israel's economy contracted in the first quarter. The Bank of Israel cut its benchmark interest rate to 3.75 percent on 25 May, its third reduction in six months, while warning of continuing risks. Prime Minister Benjamin Netanyahu said he hoped Israel would stop taking billions in aid. Israel was also reported to be withholding funds owed to the Palestinian Authority, which was described as close to financial collapse. Israel's competition watchdog declared the country's five largest banks an oligopoly over their deposit practices.
Air travel was the most covered topic. Lufthansa said it would gradually resume flights to Tel Aviv from 1 June, Wizz Air moved up the return of its Bucharest route, and direct flights from Vilnius restarted. British Airways delayed its return until 1 August, and a new airline announced flights beginning in November. Israel was reported to be supplying aviation kerosene to Germany while disruption in the Strait of Hormuz affected airlines and energy markets. Oil fell more than 13 percent to below 90 dollars a barrel on 6 May. Reports put the war's cost to companies worldwide at no less than 25 billion dollars, and packaging supplies for food makers in Japan and elsewhere were reported short of ink.
Settlement trade drew action in Europe. On 11 May the European Union approved sanctions on Israeli settlers and settler groups in the West Bank, as well as on Hamas leaders, after Hungary dropped its opposition; Israel called the decision unacceptable and politically motivated. On 22 May the Netherlands banned settlement goods, and Ireland pressed for an EU-wide trade ban. On 29 May the EU sanctioned seven more settlers and organizations.
In technology and defense, Israel issued more air defense export licenses, the Israel Defense Forces created an AI unit, and a startup was sold to Cyera for about 50 million dollars. Meta and Wix announced job cuts in Israel. Energean cut its dividend after a gas shutdown in Israel reduced output.
by WorldBrief & Maksim Micheliov | AI-generated summary
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