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Greek Economy Upgraded by S&P Global Ratings

Greek economy
Caryatids holding up the Erechtheion in Athens, atop the Acropolis. Credit: Harrietta171, CC3/Wikipedia

The Greek economy got a vote of confidence by S&P Global Ratings on Friday which upgraded its debt rating to BB+.

“The upgrade reflects our expectation of a continuous improvement in Greece’s policy effectiveness, while the fallout from the war in Ukraine appears manageable in light of considerable buffers in both the private and public sectors,” the agency said in a statement.

S&P put its outlook for the country at stable, citing “our expectation that Greece’s fiscal buffers and proven policy effectiveness will allow the country to absorb the indirect impact of the war in Ukraine on its economy and public finances.”

Greek PM Kyriakos Mitsotakis hailed the decision by S&P Global Ratings saying that the upgrade after two years of pandemic and in the middle of war “confirms the confidence in the Greek economy.”

In a tweet, Mitsotakis added: “We are just a step away from the coveted investment level, a seal of credibility that will upgrade the investment and development prospects of our country. We continue steadily with the same seriousness, dedication and hard work towards the finishing line!”

S&P Global Ratings: Deceleration of growth in Greece

S&P Global Ratings added, however, that the growth in the Greek economy will decelerate in 2022 due to the war in Ukraine.

“Russia’s invasion of its neighbor is the key driver of our projection that Greek GDP growth will decelerate to 3.4 percent in 2022 from 8.3 percent last year,” the agency said, “despite low direct export exposure to Russia, significant household savings buffers” and Athens’ moves to purchase natural gas from other countries.

The deceleration of Greek growth was confirmed earlier in April by the Central Bank of Greece which cut its projection for growth in 2022 to 3.8 percent from a previous projection of 4.8 percent.

The agency also noted that fiscal and monetary support from the European Union has boosted Greece’s economy and governance and predicted the country’s debt-to-GDP ratio would decrease through 2025 as its economy expands and expenditures lessen.

The country is also struggling with high inflation, but S&P said wages has not increased as a result, and price growth would begin to decrease by September.

Inflation in Greece jumped to 8 percent in March, according to preliminary data released earlier in April by Eurostat, the statistical office of the European Union.

The inflation rate in Greece was 7.2 percent in February compared to 6.2 percent in January.



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