Moody's downgrades Israel's credit rating amid economic challenges from ongoing conflicts

Moody's has downgraded Israel's credit rating from A2 to Baa1, marking a significant financial setback. This downgrade reflects concerns over Israel's economic resilience amid ongoing military conflicts and highlights issues of ineffective governance and political instability. The downgrade will increase borrowing costs, straining Israel's national budget and potentially impacting funding for essential services like healthcare and education. Businesses will also face higher interest rates, which may lead to increased consumer prices and inflation. As public debt rises, Israel's financial future appears uncertain. The Bank of Israel estimates war-related costs could reach $55.6 billion by 2025, with a projected public deficit of 7.8 percent in 2024, complicating fiscal management.