Global ratings agency S&P on Friday affirmed its long-term sovereign credit rating on Israel at "AA-/A-1+" and maintained its outlook at "stable."
Despite security and political risks escalating sharply in the last few days, the combination of a very effective and swift COVID-19 vaccination campaign, strong technology sector performance and rising gas exports should still underpin the country's GDP growth of 5% in 2021, S&P said.
Vaccine rollouts and a third lockdown helped Israel emerge from pandemic closures and reopen its economy, even as it remains mired in political deadlock following a fourth inconclusive election in two years.
More than half of its population had received both COVID-19 doses, the Israeli health minister said on March 25.
"Domestic political uncertainty has also been persistently high over the past two years owing to repeated elections, but so far this also has not substantially affected the economy," S&P said.
Pressure on Israel's ratings could build if security and political risks tied to the current flare-up are protracted, affecting the country's economic, fiscal and balance-of-payments metrics, the ratings agency said.