Fitch downgrades Israel due to the Gaza War.

On Monday, the US credit rating agency Fitch downgraded Israel one level, citing the possibility that the country’s continuing battle with Hamas in Gaza might stretch “well into 2025” and have an adverse effect on economic growth.

Israel’s rating was downgraded from “A+” to “A” by Fitch.

Fitch stated in a note that “the conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts.”

“Aside from the deaths toll, it might bring to a large increase in military spending, infrastructural damage, and longer-term harm to investment and economic activity, which would further worsen Israel’s credit metrics.”

The public finances have taken a hit; Fitch projects that Israel will have a budget deficit this year.

Israel has accepted the invitation from international mediators to continue talks with Hamas this week on a cease-fire and hostage-release agreement.

Instead of continuing negotiations, Hamas has encouraged mediators to carry out a truce plan that US President Joe Biden had outlined.

According to Fitch, if the fighting carries over into the following year, Israel will be forced to maintain its high military spending levels and there will be more disruptions to border region tourism, construction, and production.

Israelis have also had to be evacuated from the northern border region due to Israel and Hezbollah’s almost daily cross-border fire exchange.

The senior leader of Hamas in Tehran and a commander of Hezbollah in Beirut were killed, and Iran and its Lebanese partner Hezbollah have pledged to exact revenge.

Fearing an impending attack on Israel that would lead to a full-scale Middle East war, the United States and its European allies urged Iran to “stand down” on Monday.

1,198 persons, primarily civilians, were killed in Hamas’s strike on southern Israel on October 7, which marked the start of the Gaza conflict, according to an AFP count based on official Israeli numbers.

Additionally, 251 persons were taken prisoner by militants; of these, 111 remain in Gaza, 39 of whom the military claims are deceased.

The health ministry of Gaza reports that Israel’s military onslaught in retaliation has killed at least 39,897 persons; however, the ministry does not break down the number of casualties among civilians and militants.