Israel's Credit Outlook Downgraded To Negative By S&P Amid Escalating War With Hamas

S&P Global Ratings has downgraded Israel’s credit outlook to negative, citing potential expansion and the impacts of the ongoing war with Hamas on the nation’s economy.

S&P affirmed Israel’s credit rating at AA-, the fourth-highest score, Bloomberg reported.

Last week, Moody's Investors Service and Fitch Ratings also flagged concerns regarding Israel’s credit rating due to the conflict.

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Analysts Maxim Rybnikov and Karen Vartapetov stated, “The Israel-Hamas war could spread more widely or affect Israel's credit metrics more negatively than we expect.”

They estimate that the conflict will remain concentrated in Gaza and last for three to six months.

S&P now predicts a 5% contraction in the economy for the last quarter of 2023, attributing this to disruptions caused by security concerns and a fall in business activity. Factors such as the drafting of a large number of reservists, a halt in foreign tourism, and a broader confidence shock are also expected to negatively impact economic growth. However, they anticipate a rebound in 2024.

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