Moody’s has downgraded the outlook on Israel

Moody’s downgrades Israel’s outlook from “positive” to “stable” following recent protests against proposed changes in the judicial system.

The overall A1 rating remains in place, but the downgrade could result in Israel having to pay higher rates to potential borrowers, as well as limiting outside investment from the U.S. and Europe, which is crucial for the country’s economy.

The Tel Aviv Stock Exchange has fallen by 14% in the past month, and year-to-date, the index has lost a quarter of its value as investors concerned about the legal system changes dumped Israeli equities. Despite Israel’s strong economic growth, Moody’s cites a “deterioration of Israel’s governance” as the reason for the downgrade.

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