Credit rating agency Standard & Poor’s reaffirmed Israel’s sovereign credit rating at A on Friday, maintaining a “negative” outlook due to the country’s ongoing military conflicts in Gaza, Lebanon, and Syria. The agency cited persistent regional instability and the risk of prolonged hostilities as factors that could harm Israel’s economic performance and fiscal health.
In its statement, S&P warned that a drawn-out or intensified war could weaken Israel’s “economic, fiscal, and balance-of-payments performance,” even as the country retains strong macroeconomic fundamentals. The agency added that the prospect of resolving the war with Hamas appears remote, which could weigh heavily on Israel’s long-term growth prospects and strain its public finances.
The report also flagged external factors, particularly US policy shifts. S&P said changes in Washington’s approach to the Gaza conflict and its dealings with Iran contribute to regional uncertainty and may negatively affect Israel’s security environment and economy.
Trade tensions with the US are another concern. “US trade tariffs will impinge on Israel’s economy both directly and indirectly,” the agency noted, suggesting that any escalation could compound existing economic pressures.
This marks the third time in a year that S&P has taken action on Israel’s credit standing. The agency downgraded Israel’s rating twice in 2024—from AA- to A+, and later to A—due to the expanding scope of the war and its economic consequences.