S&P Global Ratings, the American credit rating agency, upgraded Greece’s sovereign credit rating by one notch on Friday, to “BB” from “BB-“.
It also maintained a “positive” outlook.
In its scheduled review of the Greek economy the US firm projected an economic rebound of 4.9% for this year, above the latest Bank of Greece forecast for a 4.2% growth. The recovery will accelerate to 5.8% in 2022, the agency said on Friday.
The fact S&P has also adjusted Greece’s outlook to “positive” from stable means that a further upgrade may well be due in the next 12 to 18 months, taking Greece to the verge of investment grade after more than a decade.
Finance Minister Christos Staikouras commented on the development that “this is the second time an international rating agency has upgraded the country’s rating amid the health crisis and the conditions of high uncertainty that has created on global level.”
“Without a doubt this is an exceptionally important and positive development for the Greek economy, attributed to the planning and implementation of correct policies in the economic field and generally to the efficiency of government policy, as well as a series of reform initiatives,” said Staikouras.
Growth estimate for Greece
The Bank of Greece reiterated its 4.2% growth forecast for 2021 on Tuesday, but warned that the Greek economy is facing a large number of bankruptcies of unsustainable enterprises after the year-long coronavirus crisis.
Bank of Greece Governor Yannis Stournaras is relatively optimistic for 2021 in his annual report for 2020, sticking to its forecast for an economic expansion of 4.2%, which is higher than that of the government and the European Commission, pegged at 3.5%.
However, he cautioned that this involves a lot of uncertainty due to the risks associated with the course of the pandemic as well as the special features of the Greek economy.
The pandemic has dealt a severe blow to Greece’s economy, the report states. However, it adds that it has also served as a catalyst for change, accelerating nascent trends and prompting fundamental reforms within just a few months.
“The speed at which the economy will recover will depend on three crucial factors: the acceleration of vaccine rollout schemes at the domestic and global level, the maintenance of support targeting those worst hit, and the speed of the activation of the National Recovery and Resilience Plan,” Stournaras said.