International credit-insurance firm COFACE (Compagnie Française d’Assurance pour le Commerce Extérieur) has raised Israel’s credit rating a notch, to A2-Low, from A3. Israel’s macroeconomic performance is among the best in Western countries, and reflects actual growth based on strong fundamentals. Israel’s rating is now the equivalent of Holland, Belgium, Australia and Canada.
As a credit insurer, COFACE focuses on debt as a percentage of Gross Domestic Product, and Israel has one of the lowest such levels of any country. The national debt is relatively low, and although the budget deficit is set to rise somewhat this year, economic growth should make up for the budget shortfall. The company noted that Israel’s performance was exceptional, given the security and political pressures on the government to spend money.
The company also said it expected an improvement in the relationship between Israel and the United States in the wake of the election of President Trump. With that, it said, the slowdown in the peace process and the fact that the Middle East problem will not be at the center of the Trump agenda as it was under the administration of Barack Obama means that unrest — and possibly war — is more likely, and that is something investors are likely to keep in mind when making decisions.