Israel’s economy is expected to strengthen following the halting of the war in Gaza against the Hamas terror group, but a resumption of regional conflicts remains a key concern to growth prospects, the International Monetary Fund (IMF) warned in a report on Thursday.

“Israel’s economy has demonstrated notable resilience. Following the Gaza ceasefire, economic activity accelerated markedly, and staff expect growth to firm in the near term,” the IMF said in its initial country report on the Israeli economy. “But there are downside risks, including from potential renewed regional tensions.”

The ceasefire between Israel and Hamas has remained fragile since its implementation in October. The truce halted two years of war that began with the devastating Hamas-led attack on Israel on October 7, 2023, and cost the economy around NIS 250 billion ($80 billion).

“The conflict’s legacy is substantial: defense spending remains elevated, risk premia are higher, and labor supply is constrained by extended military mobilization and reduced availability of non-Israeli workers,” the IMF cautioned. “These pressures would........

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