With geopolitics taking center stage in the media, you might have missed some of the exciting economic developments out of Israel. For instance, there are now more than 20 Israeli-founded unicorns (private companies valued over $1 billion) in both New York[1] and California[2]; as well as over 60 unicorns in Israel itself[3] – more than all of Europe combined[4]. In addition, Israel’s tech sector has raised more than $5 billion to-date in 2021, and is on pace to double its single-year record of fundraising3.

Looking past headlines is crucial when reconciling the many negative and positive aspects of a country. Israel is no different in this regard and a credit rating is perhaps the single most important economic assessment that conducts such a deep-dive analysis.

Generally, the better a country’s credit rating, the cheaper it can borrow abroad. In a typical year, Israel raises ~2 billion dollars/euros in the global markets. These funds are used to help finance the deficit and cover budgetary costs. Even though the vast majority of Israel’s debt is raised domestically, a credit upgrade or downgrade can still have a sizable impact on its cost-of-borrowing. The sheer weight of a credit decision, therefore, requires a rating agency to read past good or bad headlines to make a fair call.

Last year was especially difficult for the 130-or-so countries that receive credit ratings. COVID-19’s global impact also led to Israel falling into its first recession since 2002[5]. And yet, while many countries were downgraded over the past year, Israel’s rating remained unchanged. Why?

Rating agencies looked beyond the headlines to factor in Israel’s well-diversified economy, natural gas exports, the global step toward digital adaptation, and the robust government programs to manage the virus. They evaluated regional geopolitics, but also carefully analyzed the resiliency of the population and its economy, the structure of Israel’s debt and astute debt-management, along with the State’s powerhouse tech sector. The conclusion from all agencies, following their thorough analysis, was to preserve Israel’s ratings.

And maintaining the ratings appears to have been a sagacious decision. Israel’s 2020 GDP (gross domestic product), although negative, was better-than-forecast. In early 2021, Israel led the world in vaccinations per capita, earning it the moniker “Vaccination Nation”. Also, at this time, most analyst expectations are for Israel to have a strong bounce back year.

Israel is currently rated AA- by S&P Global Ratings (its fourth-highest rating), A1 by Moody’s Investor Services (its fifth-highest rating), and A+ by Fitch Ratings (its fifth-highest rating). All three ratings are the highest Israel has ever had.

The Foreign Trade Administration at the Israeli Ministry of Economy operates a network of 50 diplomatic missions around the world. The goal of these “Israeli Economic Missions” is to promote trade and investment between Israel and international markets. The Economic Missions promote collaboration between Israeli and local companies across all sectors, including cyber, investment, fintech, digital health, life sciences, consumer goods, wine, retail tech, sports tech, smart cities, clean energy, homeland security, software IT and water technology.


The Economic Missions provide service in three main areas:

  1. By initiating and maintaining trade agreements, and facilitating strategic cooperation with foreign companies, organizations and government agencies;
  2. Presenting opportunities from Israel to the local business community, including providing general information about the Israeli economy, industries, or specific companies;
  3. Making introductions for Israeli companies to local strategic partners, distribution channels and investors, encouraging foreign investment in Israeli companies, and identifying local entities that are open to cultivating, developing R&D or other strategic cooperation with Israeli companies.

[1] https://www.prnewswire.com/news-releases/new-york-city-is-now-home-to-21-israeli-founded-unicorns-301271185.html

[2] https://www.prnewswire.com/il/news-releases/california-is-now-home-to-22-israeli-founded-unicorns-301278099.html

[3] https://www.jpost.com/israel-news/medved-israels-red-hot-tech-sector-is-now-in-hypergrowth-666567

[4] https://en.globes.co.il/en/article-israel-has-more-unicorns-than-all-of-europe-1001366171

[5] https://www.reuters.com/article/us-israel-economy-gdp/israeli-economy-dips-2-4-in-2020-but-covid-hit-less-than-in-oecd-idUSKBN2AG14I