Moody’s upgraded the rating of Israel’s economy to “positive” thanks to fiscal discipline and high growth.
By: World Israel News Staff
Moody’s, the British credit-rating firm, upgraded Israel’s government rating from “stable” to “positive” on Friday.
Moody’s named two reasons for the upgrade: fiscal discipline and strong economic growth.
Prime Minister Benjamin Netanyahu said at the beginning of the cabinet meeting on Monday that after the Moody’s upgrade, the cabinet will approve a decision to “advance Israeli activity in the field of international development.”
“Israel is a global leader in technology, agriculture, water, health and medicine,” he said. “We have vast export potential and we are realizing it thanks to the correct policy of the government. The moves that we are leading will strengthen not only the Israeli economy, but also our diplomatic ties on every continent.”
Moody’s noted that the Israel government debt ratio has declined by more than 10 percentage points to 60% of GDP, reflecting both “prudent budgetary framework” and “robust growth performance,” driving tax revenues.
Israel’s situation was considered better than many comparable nations’ economies.
According to Moody’s, “Israel is one of only a handful of advanced economies (including Norway, Switzerland and Singapore, which are all rated AAA with a stable outlook) with a lower debt to GDP ratio today than before the [2008] global financial crisis.”
Moody’s also pointed out that Israel’s annual budget deficits have remained below 3% of GDP over the past four years.
The agency said that it expected Israel to continue to maintain annual budget deficits of no more than 3% of GDP in coming years as well as additional “tax windfalls” from the sale of hi-tech companies.
Natural gas reserves, which increasingly will be utilized, should also help offset ongoing pressures for higher social spending and tax cuts, Moody’s said.
Moody’s noted that Israel’s economy has demonstrated robust economic growth since 2008, with real GDP growth averaging 3.5% over the past decade, stronger than the median of A1 rated peers (2.9%).
The economy has reached full employment, with labor participation at around 80% among 25-64 years olds in 2017 and unemployment falling consistently since 2009 to below 4% this year.
Moody’s attributed Israel resilient economy to “its diversified industries, ranging from agriculture to high-technology products and services, and a strong culture of innovation.”
Israel ranked third place on the World Economic Forum’s Global Competitiveness Index for innovation, behind the United States and Switzerland.