The Central Bank of Israel said And credit rating agencies International: The war on the Gaza Strip is the main reason behind the negative assessment of the economy of the occupying state.
Agency was reduced Standard & Poor’s Israel’s future credit rating was negative, and the matter was attributed to fears of the growth of government debt in light of the war and the possibility of its inability to control spending due to the war.
The agency expected that Israel’s economy would contract by 5% during the last quarter of this year on a quarterly basis, stressing that economic growth would be harmed by the call-up of more than 300,000 reserve soldiers, the cessation of tourism, and the broader shock to confidence within Israeli society.
The Central Bank of Israel expected that the impact of the war would lead to a further decline in consumer spending due to decreased demand and weak supply, with the absence of workers as a result of military mobilization and the closure of institutions, especially educational institutions.
The bank expected unemployment to rise during the first months of next year, and said that the war would create disruption in manufacturing and supply chains as a result of decreased demand and imports.
It is also expected that tax revenues will erode, especially next year, while the bank’s estimates show an increase in military spending and a subsequent increase in the budget deficit by 2.3% this year and 3.5% next year.
These matters would exacerbate the size of sovereign debt to 62% of GDP this year and to 65% next year, which prompted the bank to reduce its growth rate expectations by one percentage point to below the level of 2% during the current and next years.
Standard & Poor’s was not the only one that lowered its outlook for the Israeli economy in light of the war, as two agencies preceded it Moody’s and Fitch They said that the creditworthiness of the occupying state is under review towards a negative reduction.
Everyone warns that prolonging the military conflict, expanding it, and increasing its intensity will add to the huge human losses. All of these will increase military spending, destroy infrastructure, and continually change consumer sentiment and investment.
What is worse is that all of these things will weaken the feasibility of financial and economic policies. This prompted everyone to say that the Israeli economy will remain a prisoner of suffering for a long time.
The agencies warned that the suffering of the Israeli economy may worsen further if the conflict does not stop and if there is no real and final solution. for the Palestinian issue Which represents the tragedy of the modern era.
