Israel’s credit rating has been lowered by Moody’s credit agency from A1 to A2 with a “negative” outlook, marking the first time in history that the country’s credit rating has been adjusted downward. The reasons for this change include the instability caused by the ongoing war against Hamas and concerns about a potential larger conflict against Hezbollah militias in Lebanon. Moody’s cited the “ongoing military conflict with Hamas and its far-reaching consequences” as the main reason for the adjustment.
Israeli Prime Minister Benjamin Netanyahu responded to the assessment from Moody’s by downplaying the negative credit rating and attributing it to the current state of war with Hamas. He emphasized that Israel’s economy is strong and that this decline is due to the chaos caused by the conflict with Hamas. Netanyahu assured that when the war is won, ratings will go up again, and that economic strength is not connected to this adjustment.
However, this lowered credit rating could result in increased interest rates or a weakened national currency, which could have significant implications for Israel’s economy. The conflict with Hamas and fears of a larger conflict with Hezbollah have contributed to this historic downgrade. Despite Prime Minister Netanyahu’s response, which conveyed confidence in Israel’s ability to emerge successful from these challenges, it remains uncertain what impact this adjustment will have on Israel’s long-term economic stability.