Israel’s credit rating has been lowered by Moody’s credit agency for the first time, from A1 to A2, with a “negative” outlook. This is due to the ongoing instability caused by the war against Hamas and concerns about a potential larger conflict against Hezbollah militias in Lebanon. The agency cited the “ongoing military conflict with Hamas and its wideranging consequences” as the reason for the change. Additionally, there are worries about the “risk of escalation” with Hezbollah militias on Israel’s northern border.
Israeli Prime Minister Benjamin Netanyahu downplayed the negative credit rating and attributed it to the current state of war with Hamas. However, he emphasized that Israel’s economy is strong and that the ratings will go up again when the war is won. Netanyahu assured that economic strength is not connected to this downgrade.
This lowered credit rating might result in increased interest rates or a weakened national currency. 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, uncertainty remains regarding Israel’s future economic stability.