International credit rating agency S&P has affirmed Israel’s sovereign rating at A, and retained a rating outlook of "Stable." The decision reflects the agency’s assessment that the ceasefires between Israel and Hamas and between the US and Iran will mostly hold, reducing the immediate security threat. Although the security environment remains volatile and tensions with Iran and its Hezbollah proxy in Lebanon continue, S&P estimates that unless there is further broad escalation the macro-economic consequences for Israel will be limited and that the Israeli economy will begin to recover from the second half of 2026.

Alongside the geopolitical risks, the agency makes positive mention of the strength of Israel’s economy, which rests on an innovative technology sector, strong services exports, and high foreign currency reserves.

Nevertheless, the rating is under pressure from high military spending, which is expected to amount to more than 7% of GDP in 2026 and to remain high in the medium term. S&P sees economic growth in Israel of 5.9% in 2027 with a return to routine, but that government deficits will continue to raise the debt:GDP ratio, which is expected to reach 68% by 2029.

Published by Globes, Israel business news - en.globes.co.il - on May 10, 2026.

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