Moody’s cuts Israel growth forecast, cites fragile ceasefires and regional conflict

Moody’s has lowered its 2026 growth outlook for Israel to 3.7 % from 5 %, while maintaining the country’s credit rating at Baa1 with a stable outlook.

• Moody’s said on Wednesday that Israel’s economy would grow 3.7 % in 2026, down from its January forecast of 5 %, citing geopolitical risks and the fragility of ceasefires with Iran, Hezbollah, and Hamas.
• The agency kept Israel’s credit rating at Baa1 with a stable outlook and said it expects public debt to rise under the economic and financial strain of regional conflicts.
• The Bank of Israel projects growth of 4 % in 2026, while the International Monetary Fund cut its own forecast to 3.5 % earlier in July, citing wars with Iran, in Lebanon, and in Gaza.
• Israel’s economy shrank at an annualised rate of 3.8 % in the first quarter of 2026, with private consumption falling 4.7 % and defence spending rising 9 % while civilian spending dropped 26.8 %.