Israel’s economy has largely weathered the global meltdown, but its small size means robust growth will hinge on developments abroad, a leading credit ratings service said Aug. 27.

Moody’s Investors Service, in its annual report on Israel, said the country’s short-term prospects are “relatively good” and the outlook for its investment grade A1 government bond rating is stable.

“Although the recession now appears to be over for Israel, Moody’s believes a more robust recovery will have to come from global rather than domestic developments, given that Israel is a small, open economy,” it said.

Israel’s central bank raised its interest rate Aug. 31, an indication that it saw the worst effects of recession fading and inflation as a growing threat.

The Moody’s report says Israel’s upbeat outlook reflected “the absence of the main sources of the global crisis: toxic bank assets or a real estate bubble.”

— ap