The international credit rating agency Fitch announced on Tuesday the reaffirmation of the State of Israel's credit rating at an A+ level, the removal of the "Negative Watch" and an update of the rating outlook from "Stable" to "Negative."

According to the company, "Geopolitical risks associated with the war in Gaza remain elevated and escalation risks remain present, but Fitch believes the risks to the credit profile have broadened and their impact may take longer to assess, so has removed the RWN on Israel's 'A+' rating."

Regarding the update of the rating outlook, the company mentions that "The Negative Outlook reflects the combination of uncertainties around the fiscal trajectory and the war's duration and intensity, including the risk of regional escalation. We expect a near-term jump in debt/GDP and persistently higher military spending in the context of fractious domestic politics and uncertain macroeconomic prospects, which could limit Israel's ability to bring down debt in the future."

"Risks of a widening of Israel's current conflict to include large-scale military confrontations with multiple actors - over a sustained period of time - remain high. This could include Hezbollah, other regional militant groups and Iran. This is not our base case, but such large-scale escalation, in addition to human loss, could result in significant additional military spending, destruction of infrastructure, sustained change in consumer and investment sentiment, and thus lead to a large deterioration of Israel's credit metrics," Fitch wrote.... Read More: Arutz-7