Moody’s Investor Service downgraded Israel’s credit rating due to its ongoing war with Gaza. This is the first time the credit rating has been downgraded, cutting Israel one notch to A2, the sixth-highest investment grade. Bloomberg also reported that the outlook has been changed to negative.
Moody’s concluded that the war and its aftermath will increase political risk for Israel while weakening its executive and legislative institutions as well as its fiscal strength. This will ultimately make Israel’s debt burden higher than projected before the conflict.
In response, Prime Minister Benjamin Netanyahu downplayed the decision, claiming that the Israeli economy is strong. However, the ongoing war shows no sign of ending. The conflict has resulted in extensive casualties and destruction on both sides, with the cost to the Israeli government estimated at $18 billion.
Despite Netanyahu’s claims, it is clear that the war is taking a severe toll on Israel’s economy.