peekpublishersTLDR: Israel’s finance minister has criticized Moody’s downgrade of the country’s credit rating, calling it a “political manifesto” that lacked serious economic claims. Moody’s downgraded Israel from A1 to A2, citing concerns over the ongoing conflict in Gaza and the potential for war with Hezbollah in the north. The finance minister dismissed the decision, stating that it reflected a lack of confidence in Israel’s security and national strength. Israeli officials are concerned that other credit rating agencies may also downgrade Israel’s outlook, making it harder for the government to raise money through bond sales.
Israel’s finance minister, Bezalel Smotrich, has criticized Moody’s decision to downgrade the country’s credit rating, stating that the announcement was a “political manifesto” that lacked serious economic claims. Moody’s downgraded Israel from A1 to A2, citing concerns over the ongoing conflict in Gaza and the potential for war with Hezbollah in the north. Smotrich dismissed the decision, suggesting that it reflected a lack of confidence in Israel’s security and national strength.
Moody’s decision to lower Israel’s credit rating is the first time it has done so, and the A2 rating still indicates relatively low risk. However, Israeli officials are concerned that other credit rating agencies may also downgrade the country’s outlook, which would make it more challenging for the government to raise money through bond sales.
The ongoing conflict in Gaza and the potential war with Hezbollah in the north were cited as reasons for the downgrade. The finance minister expressed confidence that once the war ended, the rating would go up again. However, experts suggest that the length of the conflict could impact Israel’s economy, particularly if it continues for an extended period of time.
Israel’s economy has previously bounced back after conflicts with Hamas, but the current war is lasting longer than previous ones and includes significant military expenditures and mobilization of reservists, putting a strain on the economy. However, the governor of the Bank of Israel, Amir Yaron, has expressed confidence in the resilience of the economy and that signs of recovery were already evident in November, the month after the war broke out.
Israel’s economy has faced challenges beyond the ongoing conflict. Concerns about governance, rising inflation, and a global slowdown in tech investments have all impacted the economy. Furthermore, proposed changes to the country’s judiciary system have raised concerns about weakening the investment climate. Moody’s report praised the shelving of the proposed changes in January, highlighting the “strong checks and balances” in Israeli governance.
