DBRS: Confirm the investment tier for Greece

The credit rating agency DBRS confirmed its debt at BBB (low), i.e. , with a steady trend. The Canadian house had given the investment tier to the Greek economy last September, after the German credit rating agency Scope, followed by S&P and Fitch in corresponding movements in October and December, respectively. In its communication, DBRS states that the stable trend reflects its view that risks to credit assessment are balanced. ‘ Good economic performance in combination with rising primary surpluses is expected to contribute, so that the debt-to-GDP ratio remains in strong decline in the future,” he notes. After the strong GDP growth by 5.6% in 2022, economic activity in Greece has slowed close to 2% and is expected to be maintained above this level in the two years 2024-2025. The rising primary surpluses, forecasted over 2% of GDP in the same period, from 1.1% in 2023, will help to reduce debt-to-GDP ratio below 150% of GDP in 2025 to 160% of GDP estimated to have risen last year. Furthermore, the implementation of structural reforms is gaining strong momentum and combined with higher investments, supported by EU resources, will increase potential GDP. However, the house notes, increased geopolitical risks affecting trade and the greatest of the expected impact on the economy from current tight financial conditions, could lead to slower growth and weaker public finances. Greece’s credit assessment is supported by its participation in the EU and the Eurozone and by reforms in the past that have increased the resilience of the economy, the house says. Greece continues to make progress in implementing the Development and Durability Plan, which includes reforms that enhance fair growth and investment, thus limiting the investment gap between Greece and other Eurozone countries. DBRS takes the view that EU resources will continue to provide incentives to implement growth-enhancing reforms while supporting the increase in investments with funds also channelled through the enhanced banking system. The credit assessment, notes DBRS, is limited by the remnants of Greece’s prolonged crisis, i.e. the very high public debt, the still high percentage of unperforming loans and the high, although now close to a one-digit level, unemployment rate. With information from APR-APM