Israel's economy has completely recovered from recession, states Moody's in its annual report on the Israeli economy, published today.
Minister of Finance Benjamin Netanyahu expressed satisfaction at the upbeat report. Standard & Poor's and Fitch Ratings have also published positive reports on Israel.
However, Moody's retained its A2 credit rating for Israel, equivalent to A-. Moody's also kept its credit rating outlook for Israel unchanged at "Stable".
Moody's predicts that Israel's economy will continue to perform well in 2005, but warns that the global economic slowdown will reduce Israel's growth rate. Moody's adds that political stability in Israel is uncertain, and that the government may find it difficult to pursue reforms and structural changes led by the minister of finance in banking, the electricity market, land, and reducing the public sector.
Moody's hints that were it not for Israel's large external debt, it might have upgraded Israel's credit rating to A3. It stated that Israel's external debt was large, compared with the group of countries with the higher rating.
Moody's particularly mentions growth in 2004. GDP rose by 4.3%, and business product by 6%. Moody's stresses growth engines: exports rose by 15%, there is a current accounts surplus, low inflation, and a low short-term interest rate. The real exchange rate fell by 20% in 2002-04.
Published by Globes [online], Israel business news - www.globes.co.il - on March 1, 2005