JERUSALEM, Nov. 8 (Xinhua) -- Credit rating agency Standard & Poor's (S&P) on Friday night revised its outlook on Israel to "stable" from "negative," while affirming its sovereign credit rating at "A."
S&P said the stable outlook reflects its view that military de-escalation, supported by the ceasefire agreement between Israel and Hamas, has lowered the immediate security risk for Israel.
"The outlook reflects our assumption that the scale of direct military confrontation will remain contained, even if tensions between Hamas and Israel persist and the broader regional security environment remains fragile," the agency noted in its report.
It noted that Israel's economic structure, driven by high-tech service exports, with a high percentage of employees able to work from home, has cushioned the impact of security disruptions.
However, it noted that the ratings are limited by high geopolitical risks, as well as increased security-related pressures on public finances. It warned that a military escalation could weaken Israel's economic, balance-of-payments, and fiscal performance.
S&P assessed that the differing views of Israel, the United States, the European Union, Türkiye, and the Gulf states on the post-war arrangements in Gaza will hinder progress toward a durable peace agreement. It also warned that Israel and Iran could engage in another round of direct military confrontation.
The agency expects Israel's GDP growth to recover sharply in the second half of 2025, reaching 5 percent in 2026, driven by stronger consumer and business confidence and a decline in reserve soldier mobilization, which will ease labor shortages.
It forecasts a general government deficit of slightly below 6 percent of GDP this year and 4.8 percent in 2026. These projections are slightly stronger than the previous ones due to the reduction in military spending, stronger economic recovery, and lower borrowing costs. ■
