US credit rating agency Fitch has downgraded Israel a notch, warning that its ongoing conflict against Hamas in Gaza could last “well into 2025” and weigh on economic activity.
Fitch lowered Israel’s rating from “A+” to “A.”
“The conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts,” Fitch said in a note on Monday.
“In addition to human losses, it could result in significant additional military spending, destruction of infrastructure and more sustained damage to economic activity and investment, leading to a further deterioration of Israel’s credit metrics.”
Public finances have been hit, with Israel projected to run a budget deficit this year, Fitch said.
The office of Israeli Prime Minister Benjamin Netanyahu insisted the economy is “solid and functioning well.”
“The lowering of the rating is a consequence of Israel’s dealing with a multi-arena war that was imposed on it,” it said in a statement on Tuesday.
“The rating will go up again when we win – and we will indeed win.”
International mediators have invited Israel and Hamas to resume negotiations this week on a ceasefire and hostage release deal, an invitation which Israel has accepted.
Fitch said that the conflict continuing into next year would force Israel to keep its military spending high and that there would be further disruption to tourism, construction and production in border areas.
With AFP
