Fitch Lowers Israel’s Credit Rating Due to Ongoing Conflict, Economic Risks
Credit ratings agency Fitch downgraded Israel’s government credit rating from A+ to A on Monday night, while maintaining a “negative” outlook. The downgrade reflects the ongoing war in Gaza, escalating geopolitical risks, and military operations on multiple fronts, which have adversely affected the country’s financial stability.
Fitch’s report highlighted the significant impact on Israel’s public finances, projecting a budget deficit of 7.8% of gross domestic product in 2024, with national debt expected to remain above 70% of GDP in the medium term. The agency warned that the conflict in Gaza could extend into 2025 and potentially spread to other fronts, which would likely necessitate continued high military spending and cause disruptions in production, tourism, and construction in border areas.
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The report also emphasized the potential for further deterioration of Israel’s economic outlook due to increased military expenditures, infrastructure damage, and reduced economic activity and investment. These factors could weaken Israel’s credit metrics even further.
Fitch also noted the heightened regional tensions between Israel and neighboring countries, which pose a significant risk of escalation that could further damage Israel’s credit profile.
