Israel Faces Economic Challenges Amid Moody's Downgrade and War Expenses

Moody's credit rating downgrade and the ongoing war with Hamas prompt Israel to increase bond issuance, aiming to stabilize its economy.

• Moody's downgrades Israel's credit rating from Aaa to A2, citing the war with Hamas and potential broader implications.
• Israeli stock market experiences moderate declines following the downgrade, but investors remain relatively unfazed.
• Israel plans to increase bond issuance, including foreign-currency bonds, to finance the war against Hamas and cover budget deficits.
• The 2024 budget anticipates raising more debt than any year except 2020, with a projected fiscal deficit of 6.6% of GDP.
• Despite economic pressures, Israeli Prime Minister Benjamin Netanyahu asserts the economy's strength and anticipates a rating recovery post-war.

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