Updated April 20th, 2024 at 14:50 IST

Greece's debt reduction efforts earn 'positive' outlook from S&P

The Greek government is projecting a 2.9% economic growth rate for 2024, exceeding the eurozone average by more than a factor of three.

Reported by: Business Desk
Greece credit rating upgrade | Image:S&P Global
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Greece credit rating upgrade: Credit rating agency S&P upgraded Greece's economic outlook from "stable" to "positive" on Friday. This positive revision reflects S&P's confidence that Greece's ongoing efforts to reduce its government debt will continue to be successful.

Stronger economy, fiscal discipline cited

S&P highlighted Greece's tight fiscal regime as a key driver of its positive outlook. The Greek government is projecting a 2.9 per cent economic growth rate for 2024, exceeding the eurozone average by more than a factor of three. This growth, coupled with an expected 2.1 per cent of GDP primary budget surplus fueled by rising investment and robust tourism revenue, paints a positive economic picture for Greece.

"Looking ahead, we believe Greece has the potential for faster economic expansion compared to its eurozone counterparts, particularly if the current pace of reforms continues," S&P stated in a press release.

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Recovery under Mitsotakis government

While Greece remains the most indebted nation within the eurozone, the center-right government led by Prime Minister Kyriakos Mitsotakis has overseen a period of significant recovery. Re-elected for a second term in 2023, Mitsotakis' administration has implemented policies that are contributing to this positive economic outlook.

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S&P expressed its expectation of continued structural reforms by the Greek government, further solidifying the country's economic and fiscal future. This includes a recent decision to raise the minimum gross wage by 6.4 per cent to €830 per month, aiming to alleviate the financial burden on households facing rising living costs.

Investment grade status regained

The positive outlook revision by S&P comes after Greece successfully exited its international bailout program in 2018. This was followed by a crucial milestone in 2023 when all major credit rating agencies restored Greece's credit rating to investment grade, ending a 13-year period where the country's debt burden had relegated it to "junk" status.

S&P's previous upgrade for Greece occurred in October 2023, and this latest revision is joined by a similar upgrade from Fitch Ratings in December 2023. These positive developments signify growing confidence in Greece's economic trajectory.

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(With Reuters inputs.)

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Published April 20th, 2024 at 14:50 IST