Israel's Economic Resilience Tested Amidst Regional Conflict

Israel's economy, despite a year marked by conflict-related turbulences, faces rising borrowing costs and financial challenges. The war's escalating expenses impact credit ratings and investor sentiment. While local investor confidence helps, international interest wanes, pressing the need for strategic economic support and government-backed investments.

Israel's economic endurance is being challenged as war expenses and rising borrowing costs strain financial structures. The conflict's direct cost, amounting to $26.3 billion as of August, is escalating, potentially reaching $65 billion by 2025. Increased costs have led to declining credit ratings and a ballooning budget deficit.

Debt-related concerns are prominent, with Israel's debt-to-GDP ratio at 67%, surpassing prior expectations. Despite a robust domestic market, international investors' retreat is evident. Norway's sovereign wealth fund and others cite market uncertainty and ESG concerns as reasons for selling Israeli bonds.

Amid these challenges, the government pledged $160 million to support its tech sector and mitigate economic downturns. The economy still raised $8 billion in international debt sales this year, but pressures on finance continue as local investors await fiscal consolidation signals from the government.

(With inputs from agencies.)