Isranomics

Moody’s raises concerns over Israel’s credit rating amidst security situation

by | Oct 12, 2023 | Economy | 0 comments

In a pivotal turn of events following the ongoing war of Israel with Hamas, Moody’s, the international credit rating agency, is set to release a critical report this Friday, potentially challenging Israel’s current credit rating of A1. The report, which focuses on the economic impact of the recent hostilities, suggests that the security situation in this conflict may differ from previous instances.

Traditionally, Israel’s credit profile has demonstrated resilience in the face of terrorist attacks and military operations. However, Moody’s latest analysis acknowledges that the ongoing conflict, with its potential for prolonged damage to economic activity and policy-making, may push the nation’s resilience to its limits.

Past security events have impacted market sentiment and led to temporary spikes in oil prices, as the Middle East remains a sensitive region for oil markets. Moody’s underlines that while these effects have been felt, they have typically been contained.

The report concludes that economic indicators are anticipated to remain exceptionally volatile, further contributing to regional geopolitical uncertainties and fluctuations in oil prices. Yet, Moody’s asserts that the consequences, at this stage, appear to be manageable. However, the report does stress that should military action escalate throughout the region, it could have far-reaching implications for global growth and inflation.

In the wake of Hamas’s surprise attack on Israel, this development warrants close attention, as it highlights the need for vigilance in monitoring economic and geopolitical shifts in this part of the world. Moody’s impending report serves as a reminder of the complex interplay between security situations and economic stability in the region.

Main article image: Signage is seen outside the Moody’s Corporation headquarters in Manhattan, New York, US.
(photo credit: Reuters/Andrew Kelly)

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