S&P downgrades forecasts for the Israeli economy: 2024 will end in stagnation

The international rating agency S&P, with a delay of several days, published its regular semi-annual report on the Israeli economy, significantly worsening its forecasts for the coming years.

According to agency analysts, in 2024 the Israeli economy will remain in the same volume as it was at the end of 2023, that is, economic growth will be 0%.

The forecast for 2025 has been reduced to 2.2%. Thus, the country’s standard of living, measured in GDP per capita, will decline significantly in 2024 and remain unchanged in 2025.

The state budget deficit in 2024, according to the new forecast, will be 9%, which is significantly higher than the 6.6% included in the state budget. The agency does not believe in the government’s ability to stay within the 4% state budget deficit in 2025. Moreover, according to the forecast, until 2027 the deficit will remain at 5-6%.

In addition to military risks, the report notes the deterioration of Israel’s relations with traditional allies, which could also negatively affect the economy.

However, the report notes Israel’s good position in terms of foreign exchange reserves, as well as a public debt structure that minimizes the possibility of sudden shocks.