As Israel celebrates the successful operation that eliminated Hezbollah leader Hassan Nasrallah, the country faces a stark economic warning. Moody’s recent downgrade of Israel’s credit rating from A2 to Baa1 indicates serious long-term financial concerns, despite the recent military achievements.
The downgrade will have immediate and long-term consequences, with Israel’s borrowing costs set to rise significantly. This will make funding essential services more expensive and add to the country’s debt service costs, limiting investments in critical areas.
Finance Minister Bezalel Smotrich remains optimistic about the economy’s recovery post-war, but experts like Prof. Dan Ben-David highlight the government’s lack of economic leadership. Issues like high defense spending and political instability pose challenges to Israel’s economic recovery.
While the military victory against Hezbollah is a moment of national pride, the economic challenges must not be overlooked. It’s crucial for Israel to address these financial realities alongside the ongoing war to secure a stable future.