Moody’s credit agency has lowered Israel’s credit rating from A1 to A2 for the first time, with a “negative” outlook, due to the instability caused by the ongoing conflict with Hamas and concerns about a potential larger conflict with the Hezbollah militias in Lebanon. This historic downgrade comes as a result of the “ongoing military conflict with Hamas and its wideranging consequences,” as well as the “risk of escalation” with Hezbollah militias on Israel’s northern border.
Israeli Prime Minister Benjamin Netanyahu has responded to Moody’s assessment by downplaying the negative credit rating and attributing it to the current state of war with Hamas. While he emphasized that the Israeli economy is strong, Netanyahu admitted that this decline could result in increased interest rates or a weakened national currency. Despite his reassurances that when the war is won, ratings will go up again, Netanyahu’s response conveyed confidence in Israel’s ability to emerge successful from these challenges.
The conflict with Hamas and fears of a larger conflict with Hezbollah have contributed to this historic downgrade. However, despite this setback, it is important to remember that Israel remains one of the most economically robust countries in the region, and its resilience in face of adversity is something worth celebrating.