Athens, Greece – In a noteworthy development, Moody’s, the prominent ratings firm, has bestowed a vote of confidence upon Greece’s economy by elevating the country’s credit rating by two notches. The rating upgrade, announced late Friday, sees Greece’s rating climb from Ba3 to Ba1, accompanied by a stable outlook. While this move falls just short of restoring the country to formal financial standing, it carries substantial implications.
Moody’s cited the government’s parliamentary majority following June elections as a key factor, asserting that it “provides a high degree of political and policy certainty for the coming four years, fostering the ongoing implementation of past reforms and the design of further structural reforms.” The agency anticipates Greece’s GDP to experience average annual growth of 2.2% between 2023-2027, driven by investments and consumption, marking a remarkable improvement compared to the average growth of 0.8% witnessed in the five years prior to the pandemic.
Furthermore, Moody’s forecasts a reduction in Greece’s debt, potentially approaching 150% of GDP as early as 2024, owing to more robust GDP growth than previously projected. The agency expressed confidence in the Greek government’s commitment to reform implementation and fiscally prudent policies, noting “broad consensus in society for these policies.”
However, Moody’s issued a cautionary note, highlighting Greece’s vulnerability to external shocks, given the significance of key sectors like tourism and shipping to the nation’s economy.
Finance Minister Kostis Hatzidakis welcomed the rating upgrade, emphasizing the importance of adhering to a responsible fiscal policy while addressing social concerns. He stated, “The credit upgrade of Greece by two notches by Moody’s is not just another reward for the fiscal and overall economic policy of the government. It is mainly a proof that the government must remain faithful to a policy of fiscal seriousness. We have achieved a lot in the economy in the last four years. We are judged every day, and there is no reason to let the progress that has been made go to waste. Steadily, we will continue to combine social sensitivity with financial responsibility.”
This news comes on the heels of DBRS Morningstar, another rating agency, raising Greece’s credit rating to investment-grade status (triple B) last week. DBRS cited Greece’s commitment to fiscal responsibility as a key reason for the upgrade, expecting the country’s primary fiscal balance to reach a surplus of 1.1% in 2023 and 2.1% in 2024.
In tandem with these positive rating developments, Greece’s economy recorded a growth rate of 2.7% in the second quarter of 2023 compared to the same period in the previous year, according to data compiled by the Hellenic Statistical Authority (ELSTAT) earlier in September. Additionally, Scope Ratings, a leading European credit ratings provider, raised Greece’s rating to investment grade in August, further underlining the country’s improving economic outlook.
