Wednesday, January 26, 2022

Fitch upgrades Greece’s credit outlook to positive Nation World News

ATHENS, Greece ( Associated Press) – Credit rating company Fitch has revised its outlook for Greece from stable to positive, although it has rated the country at BB, two notches below investment grade.

In a report released Friday, Fitch forecasts the Greek economy to grow by 8.3% in 2021, much faster than the 4.3% forecast in its previous ratings review last July, although last quarter as a result of the coronavirus pandemic. development was still affected. Waves fueled by virus variants. Earlier, the country’s gross domestic product (GDP) had exceeded pre-pandemic levels.

Greek banks are a big reason for the upgrade, “rapidly reducing the level of non-performing loans … and increasing their ability to provide credit to the real economy.”

Also on the positive side, Fitch expects the economic recovery to accelerate through 2022 and 2023, with GDP expanding by 4.1% in all these years. In addition, the still heavily indebted country is expected to fully repay one of its creditors, the International Monetary Fund, in 2022.

On the downside, the deficit is narrowing very slowly, falling from 9.7% of GDP in 2021 to 10.1% in 2020. Fitch noted that this was due to “continued pandemic-related aid provided by the government to the private sector. 15.6 billion euros ($17.8 billion or 8.7% of forecast 2021 GDP). But the phasing out of pandemic-related support measures The elimination will help reduce the deficit to 4.1% in 2022 and 2.9% in 2023.

Fitch expects the current account deficit to remain high as a recovery in demand as well as a boost to imports will be offset by export growth and higher earnings from tourism.

An upgrade to Outlook is usually, but not always, followed by a credit upgrade within 12-18 months.

Greece expects its debt to be upgraded to investment grade by the end of 2022 or early 2023 for the first time since 2010, when the financial crisis hit the country hard due to excessive deficits and debt, imposed by its creditors. Years of penance were required.

Fitch noted that “Greece has a high per capita income that is far higher than the average level for countries in the same investment grade” and that “Governance scores and human development indicators are among the highest among sub-investment grade counterparts.” Even so, still very high debt levels and bad bank loans drag down the nation’s rating, Fitch says.


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