S&P could downgrade Israel again this week

On Friday, rating agency Standard & Poor’s will issue its latest rating for Israel, just one month after its unexpected decision to downgrade Israel’s credit rating for the second time this year with a negative outlook. In April, Standard & Poor’s downgraded Israel’s rating from AA- to A+.

The credit rating agency stressed in its decision at the beginning of October that there may be a further downgrade if “the military conflict causes greater than expected damage to growth, and if the conflict continues to spread in a way that increases the risk of retaliatory attacks.” Attacks on Israel.” Now, as November 8, the original scheduled date for Israel’s credit rating announcement, approaches, fears are growing in Israel that the negative outlook will materialize.

Israeli expectations were also correct

Since the S&P decision in October, domestic expectations are also consistent with negative expectations regarding growth. The Bank of Israel lowered its growth forecast for 2024 to just 0.5% and 3.8% in 2025. Last week, the Finance Ministry lowered its growth forecast to 0.4% for 2024 (from 1.5% in the June forecast), but the ministry remains optimistic about 2025. It will witness a growth of 4.3%.

A scathing report was published last week by the research department of Standard & Poor’s Global Market Intelligence predicting that the Israeli economy will contract due to the war. The report saw a contraction in Israel’s GDP this year, with negative growth of 0.2%. Growth will also decline in the coming years, with Standard & Poor’s forecasting 3.2% growth in 2025 and 3.6% growth in 2026. The fiscal deficit is expected to reach 9% this year and remain high at 6% next year. And 5% in 2026. He confirms that there may be changes due to developments in the war.

Later this month, Fitch will publish its decision on Israel’s credit rating. Fitch’s rating for Israel is at the same level as Standard & Poor’s. At the end of September, Moody’s unexpectedly downgraded Israel’s credit rating from A2 to Baa1 with a negative outlook. Moody’s was the first rating agency to downgrade Israel’s rating in February 2024.

Published by Globes, Israel Business News – en.globes.co.il – on November 5, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.