Israel Notches Its Highest-Ever Credit Rating from S&P
Steeped with religious, political, and natural history, Israel is famed for its profound connections to the human past, while the economic dynamism and entrepreneurial spirit of the Startup Nation are sources of inspiration for the world’s future. In a move that underscores the country’s bright outlook, the prestigious Standard & Poor’s agency has upgraded Israel’s credit rating to AA- — the nation’s highest-ever.
Citing Israel’s sustained economic growth and stable fiscal outlook, S&P upgraded the country’s rating from A+. The move comes on the heels of Moody’s announcement in late July that it had boosted Israel’s outlook to positive.
“These decisions reflect the strength of the Israeli economy and the correct and responsible economic policy that we are leading on behalf of Israel’s citizens,” Prime Minister Benjamin Netanyahu said in a statement.
The S&P decision will further expand Israel’s access to credit and investment under more favorable terms. Noting that the decision will yield billions of shekels in savings, Finance Minister Moshe Kahlon said those savings would be harnessed to boost spending on health, education, and social welfare — investments in the human capital that undergirds Israel’s economic performance.
S&P forecasts economic growth of 3.3 percent per year from 2018 to 2021, pointing to increased private spending, corporate investments, and the Startup Nation’s service exports.
“Israel has demonstrated sound economic performance since the global financial crisis, with a current GDP of about $140 billion (or 50%) larger than in 2010, the current account in a sustainable surplus, and unemployment at historical lows,” S&P noted.
Eli Cohen, Minister of Economy and Industry, predicted that the S&P decision foreshadowed additional upgrades for Israel. “The Israeli economy has broken another record. After surpassing the exports record by crossing the $100 billion threshold and reaching a 50-year low in unemployment, now, for the first time, the Israeli economy is rated AA-,” Cohen said.
“S&P’s AA- rating is an important vote of confidence in the State of Israel and in the Israeli economy, thanks to smart and responsible economic policies reflected in our debt-to-GDP ratio and economic growth figures,” he continued. “The global economy’s growing reliance on technological innovation and the fact that Israel is a tech powerhouse sets the stage for additional rating increases.”
Indeed, Israel’s vibrant tech ecosystem is a major driver of the country’s economic success, with Israeli startups raising a record $5.24 billion in 2017. With $3.7 billion raised in the first seven months of 2018, the country’s startups are poised to surpass last year’s record. The nation is at the forefront of innovations in cybersecurity, artificial intelligence, auto tech, mobility, health tech, and more. Israel’s tech industry benefits from a top-flight talent pool trained at institutions like the Technion and the IDF’s elite Unit 8200 intelligence division, as well as a robust government commitment to supporting innovation through vehicles like the Israel Innovation Authority, which provides funding, R&D support, incubator programs, and more for emerging startups.