The International Monetary Fund has reported that Israel's economy is showing signs of recovery following the ceasefire in Gaza, with growth expected to accelerate in the near term. However, the organization warns that renewed regional tensions and the lingering effects of the conflict, such as elevated defense spending and a constrained labor market, could weigh on future prospects. The International Monetary Fund projects economic growth to reach 4.8 percent in 2026, though this is slightly below the central bank's forecast. The report also urges the government to pursue fiscal consolidation to manage the increased debt burden while maintaining essential civilian spending. Ongoing regional instability, particularly involving Iran, remains a significant risk to Israel's economic outlook.