S&P again downgrades Israel’s credit rating, warns of ‘delayed economic recovery’

Following Moody’s, S&P Global announces it’s again downgrading Israel’s credit rating, warning that the fighting against Hamas in Gaza and with Hezbollah in Lebanon “could persist into 2025, with risks of retaliation.”

In a press release, S&P says it lowered Israel’s long-term credit rating from “A+” to “A” and that it continues to have a negative outlook, which it says “reflects the risks to Israel’s growth, public finances, and balance of payments from the intensifying conflict against Hezbollah in Lebanon, including direct security threats in case of retaliatory rocket attacks against Israel.”

“The negative outlook also reflects the risk of a more direct war with Iran, although this is not in our current base case,” the credit rating agency adds, while noting tonight’s missile attack.

Saying it “expects a delayed economic recovery,” S&P also lowers its growth forecast for this year and next, predicting zero percent growth in 2024 and 2.2% in 2025 “alongside widening fiscal deficits both in the short- and medium-term as defense-related spending increases further.”