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A good sign for the economy: ‘Fitch’ left the credit rating unchanged

Wars, by their very nature, have significant economic damage for the countries involved: Beyond the great accompanying loss of human capital and physical property, the large amount of money invested in managing the war and the war tools, and the indirect damage caused by the reduction of human force in the Labor market – the war gives rise to a sense of uncertainty (as a reference to von Clausewitz’s famous quote), and the level of investment decreases, both internal and external, in parallel with a decrease in the trust of the capability to return loans.

The place where this decline in trust is measured, in the modern economic system, is the country’s credit rating – which reflects confidence in the economy’s ability to continue to grow, and to return to investors and lenders their money. There are dedicated research and surveillance companies of countries in the world that give their credit ratings quarterly (while these companies are already economic empires of their own) – with the most prominent being ‘Fitch’, Moody’s, and S&P.

Israel has not been spared these war casualties either, and this was evident a few months ago when ‘Moody’s’ downgraded the country’s credit rating. There was a significant concern that the other credit rating companies would align with it and thus cause considerable damage to the Israeli economy, but in the quarterly report published yesterday, Fitch decided to leave Israel’s high rating as an strong A+ rating. This constitutes a vote of confidence in the strength of the Israeli economy and society, and in the state’s ability to cope with the war.

At the same time, it should be noted that the company lowered Israel’s credit rating outlook to negative – in the expectation that there is a high chance of economic and internal crises due to a war in the north (or against Iran, or some kind of intifada in Judea and Samaria), or even against the political results of the upcoming draft law. This is a warning sign for the leaders of Israel: You’ve done right up to now, but a mistake can cause damage in the long run. Try to avoid mistakes.

To respond – rxpuyhi@gmail.com

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