Israel at War | Israeli Economy

Moody's downgrading of Israel's credit rating was hardly unexpected, but given at this irregular time and the continued negative outlook it represents an extremely unusual step. It reflects Moody's assessment that geopolitical risks have increased sharply for the short and long terms. 

Prof. Karnit Flug, VP of Research at IDI and the William Davidson Senior Fellow for Economic Policy, spoke with The Washington Institute's podcast Decision Points with David Makovsky, and discussed the current economic challenges facing Israel and future development prospects. 

IDI's Prof. Karnit Flug, VP of Research and the William Davidson Senior Fellow for Economic Policy joined Jeff Schoenfeld, Chair of the Jewish Federation's Israel and Overseas Committee and Bloomberg's Galit Altstein to discuss the implications of the ongoing war in Gaza on Israel's economy.

Over the weekend, Moody’s Investors Service announced that it had downgraded Israel’s credit rating from A1 to A2 and assigned it a “negative” credit outlook. Our policymakers would be well advised to study the risk analysis and assessment in Moody’s report closely and to take all possible steps to mitigate the risks. 

Israeli reserve soldiers are making unimaginable sacrifices to protect their country. To rise to the challenge of meeting the IDF's expanded personnel needs, Israel's policy solutions must be as diverse as are the reservists serving this nation. A "one-size-fits-all" compensation approach will not cut it. 

A decision to allow Palestinian workers back into Israel is not at all a simple matter. Despite recommendations by Israel's security agencies to allow entry to Palestinian workers, the Ministers of Construction and of the Economy oppose it for security reasons. As alternative solutions to the severe shortage of workers are unsatisfactory, we must ask ourselves whether we, as a country, are prepared to withstand another socioeconomic crisis.

This survey was conducted in order to assess public opinion regarding the preferred economic policy in light of the war in Gaza, to identify the main areas of concern to the public, and to examine the public’s views on various social issues.

The ongoing war poses unprecedented challenges—military, civilian, geopolitical, and economic. Our focus is on providing necessary responses to the needs of the military, the needs of those directly affected in combat areas, mitigating the financial damage to businesses and employees, and rebuilding the communities destroyed on October 7.

The government of Israel must recognize the strategic importance of agriculture, the food sector, and other industries producing goods that are vital for the country’s security and for the continued functioning of the business sector during times of emergency and war