Moody’s downgrades Israel credit rating on high ‘geopolitical risk’

A day after its Palestinian ally Hamas staged an unprecedented attack on Israel on October 7, Hezbollah started fighting Israeli troops along the Lebanon border.

“Longer term, we consider that Israel’s economy will be more durably weakened by the military conflict than expected earlier,” Moody’s said on Friday.

It noted that the intensity of conflict between Israel and Hezbollah has “increased materially over recent weeks, with a further severe escalation a possibility.”

“At the same time, prospects for a ceasefire in Gaza have receded,” Moody’s added.

The agency also said “there is no visibility on an exit strategy from the military conflict that would restore a level of certainty and security, on which the economy and business investment ultimately rely.”