Let. Air Force Brigadier General Rob Spaulding and Marine Garrett Exner discuss tensions in the Middle East on Evening Edit.
S&P Global Ratings downgraded key short-term and long-term ratings on Thursday israel credit rating The country is in an ongoing conflict with Hamas and has recently been at odds with Iran.
S&P Global lowered the country’s long-term foreign and local currency sovereign ratings to ‘A+’ from ‘AA-‘ and the short-term rating to ‘A-1’ from ‘A-1+’, with a negative outlook. Long-term evaluation.this comes after Iran attacked Israel Most of the missile and drone attacks were repelled by a multinational coalition including Israel and the United States, and there were also retaliatory strikes by Israel.
“This downgrade follows what we see as the already high geopolitical risks facing Israel in the aftermath of Iran’s first direct attack in mid-April 2024,” the rating agency said. wrote. The report said continued hostilities with Hamas in the Gaza Strip, as well as threats from Iran and its Lebanon-based Hezbollah proxy, have led to expectations that the conflict will continue this year. He explained.
“While our base case still expects widespread regional conflict to be avoided, the Israel-Hamas war and conflict with Hezbollah are likely to continue through 2024,” S&P Global Ratings wrote. “This is in contrast to expectations in October 2023 that military operations would continue within six months.”
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Amid the Middle East conflict, S&P Global Ratings downgraded Israel’s short-term and long-term credit ratings by one notch each. (Photographer: Kobi Wolf/Bloomberg via Getty Images/Getty Images)
In the baseline scenario, israel-hamas war This impact will continue until 2024, but its intensity is likely to diminish over time. Additionally, Hezbollah and Israel will continue to exchange fire on the northern border with Lebanon, but the conflict is not expected to escalate into a more direct war and the conflict will not spread across the Middle East. It also assumes that “substantive direct conflict with Iran will not continue, nor will there be widespread destabilization in the West Bank.”
“We currently perceive several possible risks of military escalation, including a more substantial, direct and sustained military conflict with Iran. Despite facing international pressure to restrain, Iran has signaled its intention not to escalate.Nevertheless, in our view, there is no risk of an accident, especially if there is further gunfire by both sides. “The risk of miscalculation remains,” the credit rating agency added.
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Israel’s ongoing war with Hamas in the Gaza Strip was a factor in the credit downgrade. – Scenes of destruction in the area after Israel’s withdrawal from the northern Nasirat camp in Deir al-Balah, Gaza Strip, April 18, 2024. Objects are scattered on the streets and alleys. (Photo by Anas Zeyad Fteha/Anadolu, Getty Images/Getty Images)
He also pointed out that the conflict with Israel could escalate. Iran-backed terrorist organization Hezbollah If they step up attacks on Israel, or if Israel intervenes in Lebanon to push Hezbollah further away from the Lebanese border and establish a safe zone.
S&P said the Israeli economy contracted by 5.7% on a quarterly basis in the fourth quarter of 2023. terrorist attack by Hamas It prompted Israel’s intervention in Gaza. “Given the Israeli economy’s past resilience and likely greater ability to adapt to the effects of the military conflict, we expect growth to rebound significantly in the first quarter of 2024,” the agency said. Stated.
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S&P Global Ratings cites the possibility of escalation between Israel and Iran as a risk, but does not expect the conflict between the two countries to continue. (Photo credit: JALAA MAREY/AFP via Getty Images/Getty Images)
“Nonetheless, quarterly output is likely to remain below pre-war levels throughout 2024, given the continued disruption and high uncertainty,” S&P Global said. “By expenditure, investment recorded the steepest decline of 26% in the final quarter of 2023, and we expect it to take the longest to recover from its previous peak.In contrast, consumption expenditure ( (public and private sector combined) already expects a recovery in 2023′ in the first quarter of 2024. ”
S&P Global’s report also said that Israel’s rating could be downgraded if the ongoing conflict escalates or if the impact of the conflict on Israel’s economic growth, financial position, and balance of payments is “proven. “A downgrade could occur within the next 12 to 24 months.” Even more important than we currently plan. ”
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Additionally, the current negative outlook could be revised to a stable outlook “if we deem the likelihood of military escalation to be reduced and broader security risks mitigated.” He also pointed out.
