S&P downgrades Israel’s credit outlook to negative
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S&P Global Ratings has downgraded Israel’s credit outlook to negative amid escalating conflict in the Middle East. About it it says in a press release from the rating agency.
S&P explained the worsening forecast by the escalation of the conflict with the Palestinian organization Hamas, which could involve more countries. In addition, analysts at the rating agency expect that Israel’s GDP could contract by 5% in the fourth quarter of 2023 compared to the first nine months of this year.
“The war between Israel and Hamas could spread more widely or impact Israel’s credit profile more negatively than we expect,” the rating agency noted, adding that the conflict would last no more than three to six months.
At the same time, S&P affirmed Israel’s long-term foreign and local currency ratings at ‘AA-‘.
Israel’s rating has never been downgraded in the country’s history. Earlier, the rating agency Moody’s Investors Service warned that it had begun a review of Israel’s sovereign rating (currently at A1) with the possibility of its reduction. It noted that the severity of the conflict “increases the likelihood of a longer-lasting and significant negative impact.” At the same time, Fitch placed Israel’s A+ rating on its watch list with a negative outlook.
The situation in the Middle East escalated on the morning of October 7, when the Palestinian group Hamas began military operations against Israel. The Israel Defense Forces (IDF) responded by launching Operation Iron Swords, striking hundreds of Hamas targets in the Gaza Strip. The Israeli government announced that the country had entered a state of war. As a result of the fighting, according to the latest data, about 6,500 people were killed, including more than 5,000 from the Gaza Strip.
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