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Israel GDP Growth Revised Down to 0.3% as Gaza War Takes Economic Toll

People take shelter as sirens sound in central Israel in response to what the Israel's military says projectiles fired from Lebanon, in Tel Aviv, Israel October 14, 2024. (Reuters)
People take shelter as sirens sound in central Israel in response to what the Israel's military says projectiles fired from Lebanon, in Tel Aviv, Israel October 14, 2024. (Reuters)
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Israel GDP Growth Revised Down to 0.3% as Gaza War Takes Economic Toll

People take shelter as sirens sound in central Israel in response to what the Israel's military says projectiles fired from Lebanon, in Tel Aviv, Israel October 14, 2024. (Reuters)
People take shelter as sirens sound in central Israel in response to what the Israel's military says projectiles fired from Lebanon, in Tel Aviv, Israel October 14, 2024. (Reuters)

Israel's economy grew slower in the second quarter than previously thought, data showed on Tuesday, as Israel's war in Gaza against the Palestinian group Hamas continued to weigh on growth.

Gross domestic product rose by an annualized 0.3 in the April-June period, the Central Bureau of Statistics said in its third estimate, down from 0.7% reported a month ago and from an initial 1.2% published in August.

The economy was supported by gains in consumer and state spending and in investment in fixed assets, while exports fell.

Last week, the Bank of Israel trimmed its Israeli economic growth estimate in 2024 to 0.5% from a prior estimate of 1.5%.

Along with a weakening economy, inflation has spiked and central bank officials have warned of possible interest rate increases. It held rates steady last week for a sixth straight policy meeting.

First-quarter GDP growth was unrevised at 17.2%, as the economy bounced back from a steep contraction in the fourth quarter of 2023 when the war began.

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Moody's Upgrades Saudi Arabia's Credit Rating

Moody's indicated that the rating upgrade and stable outlook are results of the Kingdom's ongoing progress in economic diversification. Reuters
Moody's indicated that the rating upgrade and stable outlook are results of the Kingdom's ongoing progress in economic diversification. Reuters
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Moody's Upgrades Saudi Arabia's Credit Rating

Moody's indicated that the rating upgrade and stable outlook are results of the Kingdom's ongoing progress in economic diversification. Reuters
Moody's indicated that the rating upgrade and stable outlook are results of the Kingdom's ongoing progress in economic diversification. Reuters

The credit rating agency “Moody’s Ratings” upgraded Saudi Arabia’s credit rating to “Aa3” in local and foreign currency, with a “stable” outlook.
The agency indicated in its report that the rating upgrade and stable outlook are results of the Kingdom's ongoing progress in economic diversification and the robust growth of its non-oil sector. Over time, the advancements are expected to reduce Saudi Arabia’s exposure to oil market developments and long-term carbon transition on its economy and public finances.
The agency commended the Kingdom's financial planning within the fiscal space, emphasizing its commitment to prioritizing expenditure and enhancing the spending efficiency. Additionally, the government’s ongoing efforts to utilize available fiscal resources to diversify the economic base through transformative spending were highlighted as instrumental in supporting the sustainable development of the Kingdom's non-oil economy and maintaining a strong fiscal position.
In its report, the agency noted that the planning and commitment underpin its projection of a relatively stable fiscal deficit, which could range between 2%-3% of gross domestic product (GDP).
Moody's expected that the non-oil private-sector GDP of Saudi Arabia will expand by 4-5% in the coming years, positioning it among the highest in the Gulf Cooperation Council (GCC) region, an indication of continued progress in the diversification efforts reducing the Kingdom’s exposure to oil market developments.
In recent years, the Kingdom achieved multiple credit rating upgrades from global rating agencies. These advancements reflect the Kingdom's ongoing efforts toward economic transformation, supported by structural reforms and the adoption of fiscal policies that promote financial sustainability, enhance financial planning efficiency, and reinforce the Kingdom's strong and resilient fiscal position.