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Moody's Affirms Israel's Credit Rating, Raises Growth Forecast Amidst Political Uncertainty
Moody's has affirmed Israel's Baa1 credit rating and stable outlook, while raising its economic growth forecast for 2026 and 2027. The agency attributed the revised growth figures mainly to a change in statistical methodology that includes overseas production, warning it distorts the domestic economic picture.
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What happened
- 01Moody's affirmed Israel's Baa1 credit rating with a stable outlook following the Knesset elections.
- 02The agency raised Israel's economic growth forecast for 2026 to 5% and for 2027 to 6%.
- 03Moody's stated the revised growth forecast is mainly due to a statistical methodology change including overseas production.
- 04The agency improved its forecast for the 2026 budget deficit to 5% of GDP and debt-to-GDP to 68.5%.
- 05Moody's warned that weakening institutional stability poses the main risk to Israel's creditworthiness.
- 06Policy shifts regarding Gaza, Lebanon, and Iran could positively impact Israel's creditworthiness, Moody's noted.
Moody's also projected a lower budget deficit and debt-to-GDP ratio, citing higher revenues. While the next government's makeup is not expected to immediately affect creditworthiness, institutional stability and foreign policy shifts are key factors for future assessments.
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