Israel Secures No. 3 Spot Among World’s Top Economies

In a major affirmation of its global economic stature, Israel has been ranked the third strongest economy in the world for 2025, according to The Economist. Surpassing economic powerhouses such as South Korea and the Czech Republic, Israel continues to outperform expectations especially amid regional challenges and ongoing conflict.

The London-based publication praised Israel’s rapid rebound from the turbulence of 2023, spotlighting the meteoric 70% rise in the share price of Bank Leumi, Israel’s most valuable listed company. “Nowhere has done better (in local-currency terms) than Israel,” the report noted. Only Portugal and Ireland placed higher in the rankings.

This distinction comes even as Israel navigates a challenging geopolitical landscape and the economic impact of war. According to recent data from Israel’s Central Bureau of Statistics, the labor market remained strong into October, and the high-tech sector, a pillar of the Israeli economy, is showing signs of robust recovery.

A key driver of Israel’s economic might is its dominance in Deep-Tech an area of innovation that focuses on scientific breakthroughs and advanced engineering. According to the 2025 “Status Report on Israeli High-Tech” published by the Israel Innovation Authority, more than 1,500 Deep-Tech firms are now active across the country, collectively raising over $28 billion since 2019.

The valuation of these private Israeli Deep-Tech companies has soared to $177 billion 15 times higher than a decade ago. The data underscores Israel’s position as a global innovation hub, second only to the United States in Deep-Tech leadership.

However, the report also warns of challenges ahead. Output from the high-tech sector has remained stagnant for two years, holding steady at 17% of GDP. R&D employment dropped by 6.5% in the first half of 2025, while venture capital fundraising has plunged nearly 80% from its 2022 peak. The formation of new companies has halved compared to ten years ago.

“This is a moment of truth,” said Dror Bin, CEO of the Israel Innovation Authority. “While Israel solidifies its place as a global Deep-Tech center, declining entrepreneurship and R&D roles signal risks we must confront.”

Gila Gamliel, Minister of Innovation, Science and Technology, contextualized the findings against the nation’s broader struggles. “Even in challenging years, when Israel is fighting a war on seven fronts, Israeli innovation proves its strength,” she said. Gamliel emphasized the need for continued investment in human capital, research, and international partnerships.

Israel's ascent in the economic rankings is not merely a financial achievement it is a testament to the ingenuity, creativity, and perseverance that define the Israeli spirit. As challenges evolve, Israel remains not just a start-up nation, but a strategic and resilient economic force on the world stage.

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