S&P Set for Key Decision on Greek Economy Amid Positive Outlook

The Greek economy has a crucial appointment with the Standards & Poor’s (S&P) on Friday, Oct. 18, with the international credit ratings agency scheduled to carry out its second and last assessment of the country’s performance for this year. Last April’s positive outlook issued by the agency lays the groundwork for another potential upgrade.

Notably, S&P is the only major credit rating agency maintaining a positive outlook on Greece, making it the most likely to elevate the country’s credit rating to the second rung of investment grade.

However, this positive outlook does not automatically ensure an upgrade. But taking a closer look at the rationale behind the agency’s last April decision offers some clues: at the time, the agency stressed that the positive outlook reflected expectations that Greece’s fiscal discipline would continue reducing its debt while growth would outperform the Eurozone average.

S&P also highlighted a potential upgrade within the next 24 months, on the grounds that the debt-to-GDP ratio further declined. According to the draft budget for 2024, Greece’s primary surplus is projected to reach 5.69 billion euros or 2.4% of GDP.

Additionally, the rating agency estimates that Greece’s economy will continue to grow at a pace higher than the Eurozone average, at least until 2027, which makes the prospect of another upgrade even more likely.

However, S&P further warned that Greece remains exposed to global economic shifts and geopolitical risks, including a potential slowdown that could affect key sectors of the country’s economy such as tourism and shipping, as well as a sudden rise in energy prices. These factors could hinder Greece’s improving credit profile.

It should be noted that before the end of 2024 the Greek economy has two more assessments from international credit agencies. Fitch is up next on Nov. 22, followed by Scope Ratings on Dec.6.