Moody’s has downgraded Israel’s credit rating from A1 to A2 for the first time, citing the instability caused by the war against Hamas and fears of expanding conflict with Hezbollah militias. According to Moody’s, the ongoing military conflict with Hamas and its wide-ranging consequences increase political risk and weaken the country’s institutions and fiscal strength in the short term. The negative outlook is due to the risk of escalation with Hezbollah at the northern border.
Prime Minister Benjamin Netanyahu responded by assuring that Israel’s economy is strong and downplaying the credit rating decline. He attributed the rating to the chaos unleashed by the conflict with Hamas and stated that when the war is won, the ratings will increase. This is the first time Moody’s has downgraded Israel’s credit rating since the agency began evaluating it in 1998. The downgrade could result in increased interest rates or a weakening of the national currency.
These developments come amid constant artillery crosses at the northern border and ongoing military conflict with Hamas since October 7. The war against Hamas has caused significant instability, leading to Moody’s downgrade of Israel’s credit rating. Netanyahu assures that the Israeli economy is strong and downplays the credit rating decline, while Moody’s cites the wide-ranging consequences of the conflict and the risk of escalation with Hezbollah as reasons for the downgrade. This situation could result in financial consequences for Israel in the form of increased interest rates or a weakened national currency.