Israeli Prime Minister Benjamin Netanyahu affirmed today, Tuesday, that Israel's economy is strong and will continue to grow, in response to a report from Moody's credit rating agency following the approval of the first part of the government's judicial reform plan. Netanyahu stated in a joint announcement with Israeli Finance Minister Bezalel Smotrich, “This is a momentary reaction, and when the dust settles, it will become clear that Israel's economy is very strong.”
For its part, Moody's credit rating agency indicated today, Tuesday, that the approval of a new law in Israel that limits some powers of the Supreme Court suggests that political tensions will continue and are likely to have negative consequences for both the economic and security situations in Israel.
In its report, it added, “We believe that the nature of the broad government proposals could fundamentally weaken judicial independence and disrupt effective checks and balances among different branches of government, which are important aspects of strong institutions.”
Moody's stated, “The predictability of actions by executive and legislative institutions has decreased, increasing the willingness to expose economic and social stability to significant risks.” It added, “This is particularly concerning given that the high-tech sector in the country has become the main driver of economic growth.”
The agency cited data indicating that about 80 percent of new Israeli startups chose to relocate their operations outside Israel this year, up from 20 percent in 2022. Moody's forecasts growth in Israel of three percent for 2023 and 2024, but its forecasts “do not include negative impacts due to prolonged social and political tensions.”
