FX.co ★ S&P Revises Israel Outlook to Stable

S&P Global Ratings has updated its outlook on Israel from negative to stable while maintaining its sovereign credit rating at 'A'. This decision is attributed to the military de-escalation facilitated by the ceasefire agreement between Israel and Hamas, which has alleviated immediate security concerns. "Our outlook considers that while the broader regional security situation remains tenuous, direct military confrontations should remain limited despite ongoing tensions between Hamas and Israel," the agency noted. S&P anticipates Israel's real GDP to grow by 5% in 2026, as the easing of military tensions helps to address supply-side constraints. This projection follows a 4% contraction in Israel's GDP during the second quarter of 2025, linked to conflict involving Iran. The agency also predicts that Israel's general government deficit will decrease to just under 6% of GDP in 2025 and further to 4.8% in 2026. Additionally, net government debt is expected to stand at 67% of GDP by 2028. In parallel, Moody's last assigned Israel a credit rating of Baa1 with a negative outlook.