Standard & Poor's announces downgrade of Israel's long-term credit
Date
10/2/2024 3:52:46 AM
(MENAFN) Standard & Poor's has announced a downgrade of Israel's long-term credit rating from "A+" to "A," reflecting a negative outlook driven by escalating security risks in the region. This decision comes as a direct consequence of the ongoing conflict with Hezbollah, which has begun to adversely affect Israel's economic landscape.
The agency highlighted that the downgrade signifies the economic repercussions of the intensified conflict. As tensions rise, the potential for an extended and deepening confrontation poses significant security challenges for Israel. These challenges are not only immediate but also have broader implications for the nation’s economic stability and growth.
S&P's analysis indicates that Israel's economic recovery is now anticipated to be delayed, with a bleak growth forecast of 0% for 2024. The report suggests that defense-related expenditures are likely to continue rising, fueled by the ongoing military engagements in Gaza and along Israel's northern border. This situation further compounds the financial strain on the economy, necessitating a reevaluation of fiscal priorities.
Moreover, the agency's projections take into account the possibility that military operations may extend into 2025, increasing the uncertainty surrounding Israel's economic outlook. The negative perception of the Israeli economy is also influenced by the heightened risk of a direct conflict with Iran, which adds another layer of complexity to an already volatile situation.
As Israel navigates these tumultuous circumstances, the implications of the credit downgrade are profound. The economic ramifications could affect public spending, investment, and overall economic health, making it crucial for policymakers to address the underlying security issues that are driving these financial assessments. In light of these developments, the path forward for Israel will require careful consideration of both security and economic strategies to mitigate risks and foster stability.
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