Ongoing Israeli-Palestinian clashes will have only contained adverse effects on Israel’s economy and rating, although they could complicate the task of forming a stable Israeli government, Fitch Ratings said.
The agency said that political and security risks which have serious long-term impact on the economy may lead to negative evaluation of Israel’s sovereign rating.
Israel’s sovereign rating
In January, the credit rating agency confirmed Israel’s A+ rating, with a stable outlook.
“The latest clashes may dampen Israel’s economic performance,” the agency’s analysts said.
Last month, the accountant general of the Israeli Ministry of Finance said that the debt-to-GDP ratio increased to 72.4% in 2020 from 60% in 2019. The accountant general indicated that there is the need for massive financing to confront the Coronavirus pandemic.
The Israeli budget deficit increased last year to 11.6% from 3.7% in 2019.
Israel’s debts reached 954 billion shekels last year, while the gross domestic product grew to 1.4 trillion shekels.
The government and the Central Bank of Israel also estimated the losses of the economy as a result of the third comprehensive closure to limit the spread of the Coronavirus pandemic, at about $1.3 billion per week.
The Israeli army has announced the launch of a military operation on the Gaza Strip under the name “Guardian of the Walls”.
Israeli media said the operation began with the Israeli warplanes carrying out a series of raids on separate targets throughout the Gaza Strip since Monday evening.
Earlier, Palestinian factions fired more rockets at the commercial heart of Israel. The later, from its part, continued its bombing campaign on Gaza, and massed tanks and forces along the border with the Strip.
An emergency meeting of the UN Security Council, the third since last Monday, will be held on Thursday evening. This meeting will be public, in contrast to the first two meetings that were held behind closed doors. Israeli and Palestinian representatives are supposed to take part in the meeting.
Fitch Ratings is a wholly owned subsidiary of Hearst Corporation. On April 12, 2012 Hearst increased its stake in the Fitch Group to 50%. The agency is one of the three major rating companies besides Standard & Poor’s and Moody’s.
The company was incorporated by John Knowles Fitch on December 24, 1913 in New York City as Fitch Publishing Company. It merged with the London-based IBCA Company in December 1997.