Israel's outlook improved to "stable" by Moody's amid easing geopolitical tensions

Jan 30 (Reuters) - Credit ratings agency Moody's revised Israel's outlook to "stable" from "negative" on Friday, saying that the country's exposure to geopolitical risks has materially eased from very high levels.

The country, which was at war in Gaza for over two years, reached a ceasefire with the Palestinian militant group Hamas in October. While the ceasefire has halted most fighting, it has not stopped entirely, and both sides have accused each other of violating the deal's provisions.

"We expect Israel's geopolitical and security environments to remain fragile, with tensions occasionally flaring up, possibly resulting in ceasefires breaking and even military conflicts re-emerging," Moody's said in its report, while maintaining Israel's local and foreign currency ratings at "Baa1".

Israel posted a budget deficit of 4.7% of gross domestic product in 2025 earlier this month, down from 6.8% in 2024 as it recorded stronger revenue, which offset its defense spending amid the war in Gaza.

The revision in outlook follows S&P, which revised its outlook on the country in November after the ceasefire agreement.