Israel’s financial ratings agency Moody’s lowered Israel’s credit rating for the first time down to the second tier of low risk. They cite Israel’s engagements in war as a danger to their economy. Prime Minister Benjamin Netanyahu downplayed the effect of the announcement and blamed the downgrade on the ongoing war. The decision reportedly angered Israel’s Finance Minister Bezalel Smotrich and others, who regarded it as a political and biased move that doesn’t reflect the security and national strength of the country. They feared further downgrades from other major agencies, which in turn could affect Israel’s economy by making it harder for the government to raise money.
The war in Gaza and a possible war with Hezbollah has led to the downgrade of Israel’s credit rating by Moody’s. The ongoing engagements in war could have a long-term impact on the economy of Israel, with major agencies yet to weigh in on the situation. Concern about the domino effect on Israel’s economy has resulted from the Moody’s downgrade of credit rating due to the war situation. Additionally, years of intense military spending are straining the economy by removing soldiers from the workforce, causing worries about the overall impact on the economy and its future.
Israel was already facing economic setbacks due to concerns regarding governance, rising inflation, and a worldwide slowdown in tech investments. Its economic struggle was compounded by tech investments and a proposed judicial overhaul that were perceived to impact investments negatively. Although Israel’s economy is showing signs of recovery, the Moody’s downgrade has painted a negative outlook, and the impact of this remains to be seen.
