The International Classification agency Moody's exceeded its semi -annual announcement of Israel, and instead issued a review of the sovereign classification prospects for Israel.
During the iron war swords, Moody's ranked Israel sharply, to BAA1 with a negative look. This is two cracks under the classification that Israel receives from S&P and Fitch competing agencies. The latter, by the way, is due to the publication of an announcement of a classification for Israel within the next few weeks.
In the current review, MOODY defines the components that are inconsistent with the classification of Israel. “The sovereign credit file for Israel reflects the very high political risks that have weakened economic and financial force. Institutions are still strong in general, but they have weakened in recent years. The credit file remains supported by high wealth levels, a strong external position and the continued access to the strong market of the government.”
In MOODY method, Israel's credit file is determined by four factors. For economic power, it receives a high class A1, but this is undermined through the low classifications of other three factors: institutions and governance power (A3); Financial Power (BAA2); And the risk of events (CAA).
Moody raises its growth expectations for Israel's gross domestic product in 2025 from 1.5 % to 3.8 %, thus similar to the majority of predictions, which are about 4 %.
In the fragile security situation, the review states, “While Israel agreed to the temporary ceasefire with both, we consider these agreements fragile with a great danger of renewed escalation, so that it is agreed on sustainable peace agreements in the long run, although there is a danger to the part, although it is renewed in excessive guidance, the renovations are compatible with excessive guidance, it is renewed.”
On the positive side, MOODY mentions three main factors in the economic power of Israel: shock flexibility; The position of net international creditor with a deep investor base and strong support for the United States; And high wealth levels “that provide some shock absorbers capacity.”
On the negative side, the review highlights “very high exposure to geopolitical risks”; “A straight political system, which weighs governance and politics,”; And “the decrease in the participation of the labor market for religious minorities, which led to inequality in income and the high social tensions.”
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General Accountant: There is no possibility to upgrade the classification
MOODY comments sometimes on the growing internal tensions in Israel. “The implementation of a controversial draft law to include the extremist Orthodox men in military service is delayed by the Israeli government, which reflects political and social divisions within the country. As a result, tensions between the government and the judiciary materially increased,” he said.
Despite the negative classification expectations, Modi lists many positive aspects of the Israeli economy. “In the aftermath of three quarterly contractions on an annual basis in a row in 2024, the Israeli economy witnessed a strong recovery in the fourth quarter of the year. This late recovery led to modest expansion by 1 % of real GDP in 2024 for the previous year.” The current review did not mention this, but the estimation of the former MOODY growth of 2024, in September last year, was only 0.5 %.
Moody sees any classification of Israel as far. “Given negative expectations, it is unlikely to upgrade the classification. We may settle in expectations if there are clear possibilities to calm strong military conflicts, in turn allowing Israeli institutions to formulate policies that support the recovery of the economy and public resources and restore security while dealing with a wide range of the first policy of politics,” writes its analyst. At the same time, he warns that “the classifications are likely to be reduced, and perhaps through multiple cracks, if a widespread struggle erupted with more material risks to Israel's economy and infrastructure.”
As another danger to the classification, it is reported that “material erosion of Israel's relations with the main allies including the United States (the United States, the negative AAA), although it is also not a financial negative impact on Israel.”
It was published by Globes, Israel Business News – En.globes.co.il – on March 26, 2025.
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