The ongoing war between Israel and the Palestinian Resistance in Gaza has had a significant impact on Israel’s credit rating. Moody’s Investors Service recently downgraded Israel’s credit rating to A2 with a negative outlook, citing the political risks that have increased as a result of the conflict.
This is a significant development for Israel, which has long boasted about its economic strength. Prime Minister Benjamin Netanyahu claims that the decision to lower Israel’s credit rating was due to the ongoing war and not the economy itself, stating that it would increase again once Israel wins the war. However, with no clear end in sight to the conflict and daily costs reaching $220 million, this may be easier said than done.
The war in Gaza has had devastating consequences for both sides. Thousands of Palestinians have been displaced or killed, while Israeli military vehicles and soldiers have also suffered significant damage. Despite Netanyahu’s rhetoric insisting that Israel will win the war, there is no clear evidence to suggest this will happen anytime soon.
Moody’s expects Israel’s debt burden to be higher than projected following the conflict, which will only make matters worse for an already struggling economy. This is a stark reminder that even countries with strong economies can be negatively impacted by political instability and conflict.