Moody’s praises strong Israeli economy

International ratings agency Moody’s today published its biannual report on the Israeli economy, summarizing the first six months of 2026. The report indicates that there are no pressures, either upward or downward, on Israel’s credit rating or the rating outlook, due to several factors acting together. According to Moody’s, on the one hand, the Israeli economy presents strong macro data, and on the other hand, a complex geopolitical situation (certainly with the upcoming elections in the background), and a large defense budget due to the ongoing war. All this leads Moody’s to wait with any rating decision to see where things develop down the road.

The current report does not include any rating decision, so Israel’s rating remains at Baa1, and the rating outlook is “stable.” In January, Moody’s raised the rating outlook for the Israeli economy from “negative” to “stable.”

Moody’s next rating decision will be made in just a few months, and according to market estimates, no change in the rating or rating outlook is expected – at least until after the Knesset elections on October 27. The ratings agency, it is belived, would prefer to wait and see clarity in the geopolitical sector, too, before making any decision.

The 2024 ratings downgrade still resonates

In recent years there have been many developments in Israel’s credit rating and rating forecasts by Moody’s, some of which have been negative. In early 2023, the rating agency issued a warning about damage to the Israeli economy, by the judicial reform that was being promoted vigorously at that time. In April 2023, it announced a change in Israel’s credit rating outlook from “positive” to “stable.” In July 2023, it issued another warning about the judicial reform, and a major risk of negative consequences for the economy, and in February 2024, following the outbreak of the war, Moody’s announced the first-ever downgrade of the State of Israel’s credit rating. In September 2024, Moody’s lowered the rating again, by two levels, so in 2024 it dropped from A1 to Baa1.

In November 2025, the first positive signal was recorded from the rating agencies, when S&P announced an increase in the outlook for Israel’s credit rating from “negative” to “stable”; and in January 2026, Moody’s issued a similar decision and also updated Israel’s rating outlook to “stable.” Moody’s’ credit rating for Israel remains at Baa1.

In the same decision, Moody’s noted that a continued reduction in geopolitical risks, a reduction in the deficit (which fell by 0.4% in June to 3.3% of GDP), and fiscal tightening measures would support a decision to raise the rating. On the other hand, Moody’s noted geopolitical tensions as a possible factor that could harm the rating – so it can be cautiously assumed that its next rating will be announced after the upcoming elections.

Published by Globes, Israel business news – en.globes.co.il – on July 15, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.