By Shlomo Teitelbaum
Publication Date: 2026-08-18 05:45:00
The national accounts data released on Monday initially prompted little reaction. Israelis have become accustomed to the economy weathering periods of war, and few were surprised that economic activity rebounded in the second quarter.
But one line in the Central Bureau of Statistics announcement deserves far more attention than it has received. The CBS said that when “production abroad” is excluded, the Israeli economy grew by just 1% over the past six months, a relatively weak rate that raises questions about the underlying strength of the domestic economy and the economic standard of living of Israelis.
“Israeli production abroad” is largely a code name for chips developed by Israelis at Nvidia, formerly Mellanox, but manufactured outside Israel. The exact breakdown by company is not publicly available, but Calcalist has learned that more than 90% of Israeli production abroad is related to Nvidia, with an even larger share linked to software companies. Other Israeli companies also produce abroad, including defense companies and potentially traditional manufacturers seeking to cope with the strong shekel.
The CBS says that Israeli production abroad has always existed, but until recently it did not consider the phenomenon significant enough to warrant separate treatment. That has now changed. The phenomenon has become large enough for the statistics agency to publish growth figures both “with” and “without” production abroad.
And the numbers show why.
In the…
