American credit rating agency S&P Global Ratings upgraded Greece’s sovereign credit rating outlook to positive on Friday.
S&P affirmed Greece’s rating at “BB+”, that is one notch below investment grade, given also the uncertainty the upcoming general election generates.
However its outlook shift to “Positive” shows that Greece is likely to emerge from “junk” status in the course of the year, for the first time in more than 13 years, Reuters says.
S&P: Greece is one of Europe’s fastest-growing economies
S&P said its decision was based on Greece’s recent progress in structural reforms, a surge in investment and its rapidly improving fiscal position, which have made the country one of Europe’s fastest-growing economies.
The rating agency had upgraded Greece from “BB” to “BB+” a year ago, i.e. in April 2022, but had a “Stable” outlook for Greece since.
Data published by Eurostat, the EU’s statistics agency on Friday showed that Greece last year returned to a primary budget surplus of 0.1 percent of gross domestic product, which excludes the cost of interest payments, after two years of deficits.
Budget revenues came in at 16.83 billion euros in the same period, outperforming the target by 2.26 billion euros, according to the official data. Spending reached 16.6 billion euros, 545 million euros less than the government’s target.
Greece, which has an election next month, has benefited from a surge in investment, a reduction in its vast debt burden and more efficient tax collection, the Financial Times says.
Tourism in the country rebounded to reach 97 percent of pre-pandemic levels last year, while Greek banks have cut toxic loans from 45 percent of their balance sheets in 2017 to below 10 percent.
Growth in Greece to exceed eurozone average in 2023
The Greek economy has made one of the strongest recoveries from the Covid-19 pandemic of any eurozone country, growing 8.4 percent in 2021 and 5.9 percent last year, with growth widely expected to remain above the eurozone average over the next two years.
According to the European Commission winter economic forecast report released in February, the Greek economy is projected to grow by 5.5 percent in 2022, 1.2 percent in 2023 and 2.2 percent in 2024, surpassing the 3.5 percent, 0.9 percent and 1.5 percent respectively, growth forecast for the Eurozone.
The country’s debt as a proportion of GDP fell from a peak of 206 percent in 2020 to 171 percent last year, according to S&P, which predicted that it would keep falling to just over 135 percent by 2026.
S&P is considered the largest of the Big Three credit-rating agencies, which also include Moody’s Investors Service and Fitch Ratings.
The next rating decision by a major agency is expected after the May 21 general election, i.e. on June 9, by Fitch, which also has Greece on “BB+” but with a “Stable” outlook.