JERUSALEM (Reuters) – Credit rating agency S&P Global said on Tuesday it expects Israel’s economy to recover at a more moderate pace than previous recessions, despite an economic recovery in the first quarter.
Israel’s economy recovered in the first quarter after growth was hit late last year at the start of Israel’s war against Hamas in Gaza.
Gross domestic product (GDP) grew by 14.1% year-on-year in the first quarter compared to the previous quarter, which saw an annual contraction of 21.7%.
S&P did not take any rationing action, but reiterated its 0.5% growth estimate for 2024, with the pace expected to accelerate to 5.0% in 2025. It noted that the recovery from the current fighting would likely be slower than the recovery of the country after the COVID-19 crisis or previous conflicts. military conflicts.
Israeli policymakers say the economy is robust and will recover faster, with the central bank forecasting growth of around 2% in 2024.
“We expect that ongoing challenges in the affected tourism, construction and agriculture sectors, in addition to heightened regional security and domestic political uncertainty, will hinder a faster recovery this year,” the rating agency said.
“More broadly, we believe that risks to Israel’s credit profile remain high,” the report said, pointing to a possible escalation of the conflict with Iran or Hezbollah in Lebanon.
S&P last month downgraded Israel’s long-term ratings from AA-minus to A-plus, citing increased geopolitical risks and a budget deficit of 8% of GDP in 2024. That followed a downgrade by Moody’s (NYSE:) in February.
