Israel’s rock bottom credit rating could continue throughout the year, according to Moody’s

Moody’s credit rating company predicts no big changes in Israel’s historically low credit score this year according to a statement made on Tuesday. 

Citing geopolitical pressures as well as internal division in domestic politics, the credit ratings agency announced their assessment that imminent recovery did not look likely. 

Last September Moody’s lowered Israel’s credit rating down two notches from A2 to BAA1 due to “diminished quality of Israel’s institutions and governance” regarding management of state finances, and increased spending needs with the war on multiple fronts, according to the Times of Israel. 

Globes called the move “an unexpectedly harsh downgrade,” saying that it was driven by the escalation in the north, and put Israel “on par with countries like Kazakhstan.”

Israeli Prime Minister Benjamin Netanyahu criticized the decision to lower the credit rating, saying that it came out of “pessimistic and unfounded” reasoning.

This new classification is the lowest it has been so far. According to Moody’s, the trajectory seems to be going down rather than up. 

Despite the comparative resilience of Israel’s economy which Moody’s acknowledged has absorbed multiple shocks, the credit ratings agency noted there is increased investor uncertainty over economic growth due to Israel’s “very high exposure to geopolitical risks.”

That is to say, while Israel’s economy has so far been able to weather storms remarkably well, confidence among investors looking on is not so strong. 

Low credit ratings result in increased costs for the government, as well as businesses and households. A stabilized Middle East and unity within Israel itself could help bring the country’s credit rating back up again, along with an increase in confidence levels from overseas investors.