The credit rating agency Standard and Poor’s (S&P) stated on Friday that Israel’s credit rating remains unchanged, according to multiple reports, affirming Israel’s “Aa-/A-1+” rating.
The announcement by S&P came about a month after the rating agency Moody’s announced a downgrade of Israel’s credit outlook to ‘stable,’ instead of ‘positive.’
As for economic growth, from an increase of 2%, according to S&P, it is now estimated that the Israeli economy will grow by only 1.5% in the coming year. However, S&P predicted that starting next year, the Israeli economy will stabilize, and return to the pace they expected before – with a 3.5% increase per year, Mako reported. However, this is merely based on a decrease in the political volatility in Israel and the country’s improvement in the global economy.
In the S&P assessment, the agency warned that the current political situation, which is characterized by uncertainty and polarization among the people, may hurt the Israeli economy.
Economists’ predictions
The Mako report also stated that the Israeli government was afraid that the agency would lower Israel’s rating similar to what Moody’s had done. However, economists predicted that “tensions will expire and that the parties involved will reach some sort of agreement.”
Economists also expect “average inflation of 3.8% in 2023, slowing from a rate of 4.4% in 2022.”
The International Monetary Fund earlier this week flagged Israel’s proposed judiciary reforms as a significant downside risk to the economy, with consequences that include the tightening of financial conditions and hindering investment, consumption and long-term growth.
Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich issued a joint statement in reaction to the positive credit rating by S&P, stating that the positive rating is “an expression of confidence in the correct economic policy we are leading. We will soon pass the state budget in the Knesset to ensure the continuation of our efforts to strengthen the economy and fight the cost of living for the benefit of all Israeli citizens.”
Yanon Shalom Yitach/Walla and Reuters contributed to this report.
