The rating agency revised its opinion on Israel after “the intensification of the confrontation with Iran” and suggests a further deterioration in the coming months. The agency forecasts a widening of the country's public deficit, which will represent 8% of its GDP this year, due to the increase in defense spending.
Higher deficits will persist in the medium term and public administration debt will peak at 66% of GDP in 2026, S&P further indicates. This is the second time that Israel has experienced a downgrade of its long-term debt rating. In February, Moody's also lowered it by one notch due to a conflict with Hamas. The war triggered by an attack by the Palestinian Islamist movement on October 7 against Israeli territory knows no respite, the rating agency says.