(Bloomberg) -- Israel's credit outlook was cut to negative by S&P Global Ratings, which cited risks that the war with Hamas could spread more widely and have a more pronounced impact on the country's economy than expected.
The credit assessor affirmed the nation's rating at AA-, the fourth highest score. Last week Moody's Investors Service put Israel's debt rating on review for downgrade and Fitch Ratings placed the nation's credit score on negative watch, both citing the conflict.
“The Israel-Hamas war could spread more widely or affect Israel's credit metrics more negatively than we expect,” analysts Maxim Rybnikov and Karen Vartapetov wrote. “We currently assume the conflict will remain centered in Gaza and last no more than three to six months.”
S&P now forecasts the economy will shrink 5% in the fourth quarter versus three months earlier amid disruptions related to security and reduced business activity, according to a Tuesday statement. The drafting of a large number of reservists, the halt of foreign tourism and a broader confidence shock will also hurt economic growth in the last three months of the year, they wrote, before a rebound in 2024.
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