Israel's credit rating cut again as conflicts drag on

Israel’s credit rating was downgraded by Fitch Ratings due to concerns surrounding the ongoing war with Hamas and geopolitical risks. Fitch maintained a negative outlook on the country’s credit and lowered the rating from ‘A+’ to ‘A.’ The downgrade reflects the impact of the Gaza conflict, increased geopolitical risks, and military operations on multiple fronts. Israel’s military action in Gaza has resulted in significant casualties and damage. The conflict’s continuation could lead to more military spending, infrastructure destruction, and a further deterioration of Israel’s credit metrics. Fitch predicts a budget deficit of 7.8% of GDP in 2024 and projects Israel’s debt-to-GDP ratio to remain above 70% into 2025. A de-escalation of the conflict and fiscal reforms could improve the country’s credit rating. Moody’s Investors Service downgraded Israel’s credit rating in February for similar reasons.