The Gaza war and tensions with Iran have taken a toll on Israel’s economy, leading major agencies to downgrade the Jewish state’s credit rating by one notch with warnings that further cuts may occur if the ongoing conflicts escalate.
S&P Global Ratings downgraded Israel’s credit rating from ‘AA-/A-1+’ to ‘A+/A-1’ as its economy slowed and geopolitical risks increased, marking its latest demotion since Moody’s rating relegation in February, 2024.
The Gaza war, amplified by the escalation in tensions between Tel Aviv and Tehran, has taken its toll on the Israeli economy since October 2023. In the fourth quarter of 2023, it contracted a whopping 20.7%, far exceeding the initial projection of a 10% slump.
The nation’s debt increased by $43 billion last year, $22 billion of which was accumulated since the beginning of the hostilities. Israel’s national currency, the shekel, has depreciated by more than 4% against the dollar in 2024.
Remarkably, the agency’s decision to cut Israel’s rating by one notch came before the Jewish state’s apparent Friday attack against Iran.
Having conducted its counterstrike on April 13 to avenge the death of two top Iranian generals in Damascus, Tehran warned that even the slightest Israeli attack would be met with strong retaliation.
On April 19, an Iranian base near the city of Isfahan was subjected to a drone strike possibly carried out by Israel in response for the April 14 Iranian missile attack on Israeli military installations.
While the April 19 attack on Iran was quickly attributed to Israel by the media, it is not immediately clear who carried out this strike, argues political analyst Alexander Kargin, an expert on Israel and the MENA (Middle East and North Africa) region.
On April 19, an Iranian base near the city of Isfahan was subjected to a drone strike. As per EU and US governmental sources, the attack was conducted by Israel.
He points out that so far neither Israel nor Iran have confirmed that it was an Israeli attack, with the whole incident currently being portrayed simply as a drone strike on an Iranian airbase.
However, with the risk of escalation lingering, the future of the Israeli economy appears to be hanging in the balance. Continuous tit-for-tat attacks between Iran and Israel would be a disaster for the Israeli economy.
Israel’s continuous standoff with Gaza, Lebanon and Yemen is also fraught with risk of exhaustion for the Jewish state economy.
The optimistic scenario includes the repatriation of the hostages, a civil administration in the Gaza Strip that replaces the Hamas, a political arrangement with Lebanon/Hezbollah, a balance of deterrence with Iran and a political agreement with Saudi Arabia.
If this happens, Israel will be able to gradually reduce its military expenditures and restore its standing in the international capital markets. This means returning to the path that was abruptly disturbed on October 7, 2024.
Sputnik / ABC Flash Point News 2024.
America did the attack, just to hold and diplomatically block Israel from committing political and military suicide?
Israel has NO economy. The Jewi$h entity live on U.S. taxpayer handouts. The Jewz have an iron grip on all aspects of Americans life, from the media and finance industry to the entertainment industry and from the justice system to the education system are controlled by Jewz. Even Pedophilia gangs and human (children) Traffickers are controlled by Jewz. Remember Jeffrey Epstein and Ghislaine Maxwell? Poor Americans.