Standard & Poor’s credit ratings agency downgraded Israel’s long-term rating from A+ to A due to heightened security risks in light of the latest escalation in the conflict with Hezbollah in Lebanon, as well as the risk of a more direct war. With Iran.
The agency highlighted concerns about potential security threats, including retaliatory missile attacks against Israel, which could exacerbate the impact of tension on the economy.
Moody’s lowered Israel’s credit rating by two notches to “Baa1” last week, and warned of downgrading it to “high risk” if the current escalating tension with Hezbollah turns into a widespread conflict.
The fighting escalated
“We now believe that military activity in the Gaza Strip and escalating fighting across Israel’s northern border, including a ground incursion into Lebanon, may continue into 2025, with risks of retaliation from Israel,” S&P said.
The agency said that the increasing possibility that the conflict between Israel and Hezbollah will last longer and intensify in strength poses security risks to Israel.
Commenting on Standard & Poor’s action, the Israeli newspaper Yedioth Ahronoth said that the agency’s downgrade of Israel’s credit rating came “immediately and earlier than expected.”
She indicated that the credit rating agency expects zero growth for the Israeli economy this year due to the escalation of the conflict with Hezbollah and a budget deficit of 9%.
Moody’s had expected a significant reduction in Israel’s growth during 2025 from 4% to 1.5%, and long-term growth expectations were reduced from 4% to 3% annually.
As a result, government debt is expected to rise to 70% of GDP in the coming years, a figure much higher than previous estimates.
Iranian attack
Standard & Poor’s’ decision coincided with Iran’s announcement of launching dozens of missiles at Israel (180 missiles according to Tel Aviv’s estimate), causing human casualties, material damage, and the closure of airspace, while millions of Israelis rushed to shelters and sirens sounded throughout the country.
In the same context, Israeli Prime Minister Benjamin Netanyahu said, in his speech during the cabinet meeting, that “Iran committed a big mistake tonight (last night with its attack on Israel) and will pay the price for it.”
Sirens sounded in dozens of cities and towns in southern and central Israel, at a time when Israeli army spokesman Daniel Hagari called, in a televised statement, not to circulate videos of Iranian missiles falling.
According to observers, Israel is concealing the human and material losses resulting from its war on the Gaza Strip and Lebanon. It prevents photography and the circulation of photos and video clips, and warns against providing any information to the media in this regard except through media outlets subject to its strict control.
With absolute American support, since October 7, 2023, Israel has been waging a war on the Gaza Strip that has resulted in more than 138,000 Palestinian martyrs and wounded, most of them children and women, and more than 10,000 missing persons, amid massive destruction and famine that claimed the lives of dozens of children, in one of the worst Humanitarian disasters in the world.
To demand an end to this war, Lebanese and Palestinian factions in Lebanon, most notably Hezbollah, have exchanged daily bombardments with the Israeli army across the “Blue Line” since October 8, resulting in a total of 1,873 martyrs, including children and women, and 9,134 wounded, as of yesterday evening, Tuesday. According to the Lebanese Ministry of Health.
In response to this bombing, since September 23, Israel has intensified its aggression against Lebanon, which as of Tuesday evening left at least 1,073 dead, including children and women, and 2,955 wounded, in addition to more than a million displaced people, according to Anatolia’s monitoring of Lebanese authorities’ data.
