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Israel’s credit rating is expected to remain unchanged in 2025, global ratings agency Moody’s announced on Tuesday.
The firm reaffirmed the country’s current BAA1 rating, which is the lowest in its history, and maintained a negative outlook due to persistent economic and geopolitical challenges.
Moody’s acknowledged Israel’s strong economic resilience and ability to withstand financial shocks but warned that investor confidence remains shaky.
The agency cited Israel’s “very high exposure to geopolitical risks” as a primary factor driving market uncertainty. This comes amid the ongoing Israel-Hamas war, which has created significant instability in the region and has dampened economic growth prospects.
Political and Geopolitical Concerns
The report noted that Israel’s “polarized political system” has had a direct impact on its credit rating. The country has experienced a turbulent political climate in recent years, marked by frequent elections and contentious policy debates.
Moody’s indicated that the lack of political consensus on economic and security policies further exacerbates investor concerns, limiting the potential for credit rating improvement.
Additionally, the continued military conflict with Hamas has placed a strain on Israel’s fiscal position, increasing defense expenditures and disrupting economic activity.
The war has led to decreased foreign direct investment and sluggish growth in key industries, including technology and manufacturing.
Challenges for Economic Growth
While Israel’s economy has traditionally demonstrated resilience, the uncertain geopolitical landscape has slowed growth momentum.
Moody’s highlighted concerns over Israel’s long-term economic trajectory, emphasizing that external investors are more cautious than usual due to regional tensions and domestic instability.
Moreover, the agency pointed out that ongoing security risks could further weaken consumer and business confidence.
The Israeli government has undertaken measures to stabilize the economy, but the persistent threat of escalation in the conflict undermines these efforts.
Outlook and Future Prospects
Moody’s made it clear that an upgrade to Israel’s credit rating is unlikely in the near future. “Given the continuation of the Israel-Hamas War and its implications on economic stability, we do not foresee a positive shift in Israel’s credit rating in the short to medium term,” the agency stated.
Despite the negative outlook, Moody’s recognized that Israel still possesses strong economic fundamentals.
The country remains a global leader in technological innovation, and its financial institutions continue to operate with stability. However, until geopolitical tensions subside and political cohesion improves, Israel’s credit rating is expected to remain under pressure.
Market analysts suggest that Israel’s ability to navigate these economic and political hurdles will be crucial in shaping its financial standing in the coming years.
Investors and policymakers will be closely watching developments both in the conflict and in domestic politics to gauge the potential for economic recovery.
For now, Israel remains at a crossroads, balancing its robust economic foundations against the challenges posed by ongoing security threats and political uncertainty.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members