On Friday, credit ratings agency Moody’s completed its assessment of Israel and downgraded the country’s rating from “A1” to “A2″. The downgrade was based on significant political and fiscal risks stemming from Israel’s conflict with the Palestinian group Hamas.”While the conflict in Gaza may subside temporarily, there is currently no durable agreement to end the hostilities and no plan for long-term security restoration and strengthening in Israel,” Moody’s stated. Israeli forces were preparing for a potential ground operation in the southern Gaza city of Rafah, where hundreds of thousands of displaced individuals from the ongoing violence in the north are in dire circumstances. Prior to the scheduled rating review, Moody’s had cautioned Israel about the potential negative impact of a prolonged war with Hamas on the country’s credit rating. Image depicting economic recession (credit: PIXABAY)Nation and economy reeling from October 7 attacksSurprise attacks by Hamas had sparked the most severe escalation of violence in 50 years, leading to concerns not only about the humanitarian toll but also the economic impact. Moody’s, originally set to review Israel’s “A1 stable” rating, stated that the possibility of a downgrade would hinge on the course of the conflict. Israel’s political instability had been an ongoing threat to the country’s credit rating, with previous attention focused on the government and reforms led by Netanyahu.
