S&P says Israeli economy shows resilience, warns of security spending fallout

Global credit rating agency S&P says Israel’s “wealthy” economy has historically shown resilience during military conflicts but warns about the impact of increased spending on public finances as the US-Israeli war with Iran enters its fourth day.

“Israel’s wealthy economy has historically been resilient not least due its sizable high‑tech services sector (some 20% of GDP and over 50% of exports), with a high percentage of employees able to work from home,” says S&P. “This should somewhat cushion the impact of security disruptions.”

The rating agency says the “development of offshore gas fields transformed Israel into a net exporter of natural gas in recent years,” while “tourism accounts for just 2%‑3% of total exports.”

At the same time though, the rating agency cautions that “the elevated security spending weighs on public finances.”

“Israel’s small size and high population density suggest the socioeconomic and fiscal fallout from physical damage to infrastructure could be sizable,” says S&P.