International credit rating agency Standard & Poor's announced Friday that it was affirming Israel's relatively high AA- rating, further giving the economy a "stable outlook," despite the recession triggered by the coronavirus pandemic.
Israel's gross domestic product shrunk by an annualized 28.7% in the second fiscal quarter of 2020 and, together with faltering performance over the first quarter, which was severely impacted by the outbreak of the coronavirus in Israel, it has caused the economy to contract 10.1% over the first six months, the Central Bureau of Statistics said last week.
Follow Israel Hayom on Facebook and Twitter
Still, S&P's counterpart Moody also recently reaffirmed Israel's credit ratings as A1.
The ratings are an indication of the credit-worthiness of a nation that issues debt and how likely it is to repay the debt.
S&P cited Israel's robust economy, flexible monetary policy, relatively strong pool of local savings and access to domestic and international capital markets.
The agency further noted that the peace deals with the United Arab Emirates and Bahrain were likely to lead to economic cooperation, increased commerce and better security for the three countries.
S&P estimated that Israel's economy will shrink by 5% in 2020 over the pandemic, its biggest drop in decades, but will recover over 4.5% in 2021, the Globes business daily reported.
The International Monetary Fund predicted that the Israeli economy will shrink by 6.3% in 2020, adding it does not believe Israel's GDP would be able to return to its pre-pandemic level until 2022.
The agencies' position refuted concerns expressed by Finance Ministry officials who warned that the delays in passing a state budget could jeopardize Israel's ranking.
Finance Minister Israel Katz lauded S&P's decision, saying, "The decision by S&P to keep the State of Israel's credit rating at AA-, with a stable outlook, is a great expression of trust in Israel's economy and a mark of praise for the State of Israel. Israel is in a good position in relation to many countries in the world that are struggling with the coronavirus crisis."
Prime Minister Benjamin Netanyahu welcomed "another impressive vote of confidence in the economic policy that we have been leading." He noted that Standard and Poor's has lowered its credit rating for other developed countries during the pandemic.
Subscribe to Israel Hayom's daily newsletter and never miss our top stories!
