Fitch Ratings, a major credit ratings agency, has revised the Outlook on Israel's Long-term foreign currency Issuer Default Rating (IDR) from Positive to Stable, meaning that it no longer believes Israel’s rating is likely to improve in the next two years.
It’s not likely to get worse, but it’s no longer on track to get better. The Outlook on the Long-term local currency IDR is Stable. The Long-term foreign and local currency IDRs have been affirmed at 'A' and 'A+' respectively.
In its announcement of the change, Fitch said the change in outlook was because of the expected wider fiscal deficit in 2014 and 2105 as a result of Operation Protective Edge in Gaza in the summer.
Fitch is the first international ratings agency to consider the economic impact of Operation Protective Edge. The company said Israel would likely experience "real GDP growth of 2.3% in 2014 despite a period of stagnation in the third quarter."
It further noted that things would like improve over the next two years: "For 2015 and 2016 growth is forecast to average just over 3%, driven by a post-conflict rebound (particularly in tourism), rising investment, a stronger global economy and currency weakness."
