Israel Judicial Reform 'Great Chaos'... "Economic Growth Rate Shrinks to 1.5%"

International Credit Rating Agencies Forecast Economic Impact
S&P "Polarized Economic Growth Pressure"
Moody's "Damage to Alliances Including the US"

Amid escalating backlash against the Israeli far-right regime's legislation to undermine the judiciary, international credit rating agencies are issuing repeated warnings that political uncertainty will drag down economic growth.

On the 27th (local time), the U.S. international credit rating agency S&P projected that Israel's economic growth rate this year will sharply slow to 1.5%, compared to 6.5% last year. In a report on Israel's credit rating released that day, S&P stated, "If the Israeli government and opposition fail to reach an agreement on judicial reform legislation, political confrontation will intensify and negatively impact medium-term economic development."

In the short term, political uncertainty is expected to lead to weak performance in trade with key partners such as Europe and the United States, triggering a vicious cycle of monetary tightening and significantly slowing economic growth this year.

S&P added, "We expect Israel's political confrontation and uncertainty to remain high over the coming months," but regarding key ruling party figures' announcements to further reduce judicial powers through additional legislation, it assessed, "It is currently unclear whether further judicial reforms will be adopted."

On the same day, S&P maintained Israel's sovereign credit rating at 'AA-' with a 'stable' outlook but left open the possibility of a future downgrade. The next rating review is scheduled for November 10.

[Image source=EPA Yonhap News]

Earlier, the Israeli far-right regime led by Prime Minister Benjamin Netanyahu passed the 'Basic Law Amendment on the Judiciary' on the 24th, which removes the judiciary's ability to check the executive branch, deepening political division and turmoil.

Since the related plan was revealed in January, nationwide anti-government protests have intensified, with the Israeli labor union announcing a general strike and thousands of reservists declaring refusal to serve. Tens of thousands have blocked roads across the country, including around the parliament and Supreme Court, continuing protests that have begun to halt some economic activities.

Anti-government activist groups have filed for judicial review of the legislation to undermine the judiciary, with the Supreme Court hearings set to begin in September.

This is the second time international credit rating agencies have issued warnings regarding the controversy over Israel's judicial reform. Earlier, on the 25th, Moody's stated in a report that "there is a risk of heightened political and social tensions due to the judicial reform legislation," and "this is expected to negatively affect Israel's economic and security situation."

About three months after the judicial reform plan was revealed, in April, Moody's downgraded Israel's governance outlook from 'positive' to 'stable,' citing deterioration in governance.

Moody's evaluated, "While internal conflicts and geopolitical tensions have not previously had a significant impact on Israel's economy, if tensions with Palestine escalate further, the impact on Israel's economy will be unavoidable, potentially endangering relations with allies such as the United States."

This content was produced with the assistance of AI translation services.