Moody's upgrades Israel's credit outlook from "negative" to "stable"

JERUSALEM, Jan. 31 (Xinhua) -- Global ratings agency Moody's revised Israel's credit outlook from "negative" to "stable" Friday night while keeping its sovereign credit rating at Baa1.

The agency said the upgrade reflects the easing of Israel's geopolitical risks following the end of the military conflict with Iran in June 2025, and the ceasefires with Hamas and Hezbollah.

Moody's noted that while security risks remain, Israel's economy has shown resilience, projecting a GDP growth of 5 percent in 2026 and sustained growth of 3.0 to 3.5 percent in the following years.

It added ongoing investment in the technology sector and strong market access has also helped keep borrowing costs manageable despite lingering geopolitical risks.

The agency expects government debt to stabilize at around 68 percent of GDP, higher than pre-conflict projections of 50 percent.

Moody's concluded that long-term geopolitical risks remain high and continue to constrain the rating, but Israel's economic resilience, growth in the technology sector, and broad market access help mitigate fiscal risks and support credit stability.

A credit rating is an assessment assigned to countries, companies, and individuals that reflects their ability to repay loans in the future.

Israel's sovereign credit rating had never been downgraded by major agencies until February 2024, when Moody's lowered it from A1 stable to A2 negative amid war-related fiscal pressures. In September 2024, Moody's further downgraded it to Baa1 negative. ■