Fitch Ratings, a leading U.S. credit rating agency, has downgraded Israel's government credit rating from A+ to A. The outlook remains unchanged at \"negative.\" This decision comes amid the ongoing conflict in Gaza, which has heightened geopolitical risks and spurred military operations on multiple fronts.
The agency highlighted that Israel's public finances have been severely impacted, with a projected budget deficit of 7.8 percent of GDP in 2024 and debt expected to remain above 70 percent of GDP in the medium term. Fitch warned that the conflict in Gaza could extend well into 2025, increasing the likelihood of broader regional tensions.
As the situation persists, Israel may face continued high spending on immediate military needs, as well as disruptions to sectors like production, tourism, and construction in border areas. Fitch noted that these factors could lead to significant additional military spending, infrastructure destruction, and sustained damage to economic activity and investment.
\"The high level of tensions in the region and the risk of escalation further damage Israel's credit profile,\" said Fitch in their report. The agency emphasized the potential for further deterioration of Israel's credit metrics if the conflict continues or broadens.
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Fitch lowers Israel's ratings from A+ to A citing Gaza conflict
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