Relatively resilient economy
Despite this, the economy has remained relatively resilient in the short term. Growth recovered quickly following the immediate post-war contraction, while inflation avoided major spikes and remained within the country’s 1 percent to 3 percent tolerance range.
Israel also pivoted further toward defense technology following the outbreak of the Gaza conflict, with defense exports rising to $19.2 billion in 2025, a 47 percent increase from 2023. Israeli defense startups working with the Defense Ministry’s R&D directorate attracted more than $1 billion in funding, mergers and acquisitions, and financing in 2025, compared with roughly $150 million the previous year.
Levy, who served as an Israeli government Spokesperson from the start of the Gaza war until March 2024, said Hamas’ main tactic had been a deliberate disinformation campaign aimed at spreading anti-Israel propaganda worldwide. He said this may have discouraged some countries from investing in Israel despite its advances in defense technology.
Disinformation war vs Israel
“[U]ndoubtedly one of the goals of the disinformation war against Israel is to weaken it. It’s to isolate it, to cut it off from its allies. It’s to make investors think twice, ‘Is it really worth doing business with this country?’” he said.
Foreign direct investment (FDI) data showed Israel had only 19 greenfield FDI projects in 2024, the lowest number in two decades and a steep decline from 84 in 2018. However, the Finance Ministry noted that Israel remains among the OECD leaders in FDI relative to GDP, with FDI accounting for about 2.7 percent of GDP. By 2025, nonresidents’ stock of direct investment in Israel was equivalent to roughly 49 percent of GDP, with the lion’s share of foreign investment going into energy projects.
The Israeli government has said Hamas and its supporters have waged an extensive propaganda campaign, including denial and distortion of the 7 October attacks, fabricated claims of Israeli atrocities, and recycled or doctored footage.
Researchers have catalogued more than 5,000 false or misleading claims, while NewsGuard identified 111 false narratives across 331 websites. On X, researchers found more than 2,000 posts from verified accounts generating roughly 500 million impressions, including fabricated reports, doctored documents and recycled footage.
“It’s easier to destroy [Israel] if you weaken it and isolate it and first assassinate its character. But the Israeli economy is strong, thanks to its tech, defense exports, and hopefully that speaks for itself — but it definitely doesn’t leave room for complacency,” Levy said.
Disinformation campaign ‘staggeringly successful’
Levy, who is of British descent, was removed from his position as spokesman in March 2024 following complaints from the UK government over his public criticism of its stance toward Israel and the war. He described the disinformation campaign led by radical Islamic groups such as Hamas as “staggeringly successful,” referring to the United Nations’ position that Israel had committed genocide in Gaza as a “hoax.”
“The genocide hoax is fueling real political violence in the West. And the failure to stand up to it is fueling political extremism in these countries as well. So that’s the point that I’m always keen to emphasize.”
