Following the Knesset’s passage of the reasonability law, a number of rating agencies have advised investors to steer clear of Israel. Israel’s credit rating was cut by Morgan Stanley on Tuesday to “dislike,” noting the economy’s downward trend under the present administration.
While warning investors of “upheaval and constitutional crisis between the judicial and executive branches,” Moody’s published a special report without lowering the nation’s overall rating.
The bill was introduced amid significant demonstrations, which have been ongoing since January and are anticipated to continue, according to Moody’s. There is a considerable possibility that Israel’s economy and security situation may suffer.
According to Moody’s, “Venture capital investments in Israeli high-tech firms have materially decreased, with the sector raising $3.7 billion in the first six months of the year, the lowest amount since 2019.
There are hints that Israel is decoupling from global patterns, even though the downturn “reflects global trends in the sector, triggered by tighter financing conditions and a degree of normalization after the pandemic.”
After the contentious bill was approved by the Knesset on Monday, Israeli market indices and the shekel’s value relative to the US dollar fell. Tuesday saw a further decline in the trend.
In a joint statement this afternoon, Prime Minister Netanyahu and Finance Minister Smotrich rejected the reports and the market trends. When the smoke clears, it will be obvious that the Israeli economy is very robust. This is only a temporary response.
“Orders are pouring into the security industries. The gas sector is expanding its exports to Europe, and seven corporations are currently vying for billion-dollar exploration contracts in Israel.
Intel will invest $25 billion in Israel, which will be the company’s largest investment outside of the US.
In addition to making progress in AI, cyber, and chip manufacturing in Israel, NVIDIA is currently constructing a supercomputer there. Inflation has been restrained, while growth has increased.
The level of free market competition is rising as regulations are loosened.
The Israeli economy is supported by solid fundamentals and will expand in the future under skilled management that is implementing a reasonable economic strategy.
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