S&P revises outlook on Israel’s debt to negative, from stable, expects 5% contraction in the economy

S&P Global Ratings late Tuesday revised its outlook on Israel’s sovereign debt to negative, from stable, and reaffirmed the country’s AA- ratings. The Israel-Hamas war “will remain centered in Gaza, but there are risks that it could spread more widely with a more pronounced impact on the economy and security situation in Israel,” S&P said. The debt ratings agency forecast the Israeli economy to contract by 5% in the fourth quarter, as compared with the third quarter, before rebounding in early 2024. “The contraction will stem from security-related disruptions and reduced business activity,” as well as the drafting of large numbers of reservists, a shutdown in the tourism sector, and “a broader confidence shock.”