S&P Global Ratings (previously Standard & Poor’s) revised on Friday its outlook on Israel from negative to stable in light of the ceasefire in Gaza brokered by the Trump administration.
The American credit rating agency provides independent credit ratings on debt issued by companies and governments, assessing their creditworthiness on a scale from AAA to D.
The agency affirmed its “A/A-1” long- and short-term sovereign credit ratings on Israel, but with an improved outlook.
The “military de-escalation, underpinned by the ceasefire agreement between Israel and Hamas, has lowered immediate security risk for Israel,” S&P Global Ratings writes.
The S&P Global division said that it could raise Israel’s credit ratings if its growth and fiscal outcomes proved stronger than currently projected.
It emphasized that while military tensions have eased, the geopolitical risks Israel faces remain high, citing the Israel Defense Forces’ continued activities in Lebanon and Syria and possibly another round of fighting with Iran as factors that increase regional uncertainty.
The agency moreover stated that Israel’s GDP “will likely remain below the pre-war trend … due to the lasting effects of the war.
“Labor supply constraints will likely persist as more mobilized workers will likely remain in the military compared with before the war, and Palestinian workers formerly employed in the construction industry (which constitutes 5% of GDP) are only partly replaced by foreign labor,” it added.
