International ratings agency S&P has announced that Israel’s credit rating and rating outlook will remain unchanged at AA-/A-1+ and stable, respectively. This is positive news for Israel, which will be able to continue raising debt on more convenient terms and at relatively low interest rates. As part of its considerations, S&P cited Israel’s strong macroeconomic performance including its low level of debt and stable balance of payments.
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The AA- credit rating is higher than Moody’s rating for Israel of A1. Last month Moody’s lowered Israel’s credit outlook from positive to stable because of the political divisions in the country over the planned judicial overhaul. On the political situation in Israel, S&P said, “Our basic scenario assumes that some sort of consensus will be created that will allow coping with the political tensions around the issue.”
Although the rating and outlook remain unchanged, S&P has sharply cut Israel’s GDP growth forecast to 1.5% in 2023 because of the domestic political disputes and the global economic slowdown. Israel’s economy grew 6.5% last year and the Bank of Israel’s growth forecast is for 2.5%-3% in 2023. Earlier this week the IMF cut Israel’s 2023 growth forecast from 2.9% to 2.3%. S&P sees Israel’s growth climbing to 3.5% next year as the tech sector recovers.
Published by Globes, Israel business news – en.globes.co.il – on May 13, 2023.
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