Moody’s fears for coalition over weak growth

Credit rating agency Moody’s worries that news of slow second-quarter economic growth could topple Prime Minister Benjamin Netanyahu’s government, leading to instability that could threaten the country’s credit rating, the business journal Globes reports.

The Central Bureau of Statistics reported Sunday that Q2 2015 growth was low enough for the Treasury to downgrade its growth forecast for 2015 from 2.5% to 2%.

“A sharp slowdown in growth, if it were to persist, would endanger the deficit targets set in the carefully crafted [coalition] agreements and the government’s ability to gain approval for the budgets in the Knesset, a credit negative that would likely precipitate new elections,” Moody’s analysts Kristin Lindow and Joshua Grundleger write, according to Globes.

“Fiscal authorities have little or no additional room to maneuver because spending ceilings have been set and the central bank policy rate is already virtually zero.”