Investment grade: Markets and Greek gvt anxiously await S&P

With S&P’s verdict on Greece, the cycle of 4-year ratings closes. Late in the evening the riddle will be solved and it will be seen if the Greek economy will finally acquire the investment grade. Several analysts call an upgrade to investment grade unlikely until there is a clear picture of the next government.

After twelve upgrades of Greece since 2019, S&P rates the country one step below investment grade. Even if Greece does not receive investment grade next Friday, as long as there are no unpleasant surprises, the country is estimated to return to investment grade within 2023.

Strong signal for markets

The investment grade, according to economists, is expected to prove a strong signal for the markets, improving expectations and leading to the expansion of the investment base and, by extension, the de-escalation of financing costs, both for the Greek state and for domestic businesses.

The factors that rating agencies take into account are structural, macroeconomic, fiscal and the external balance. As long as there are uncertainties about the future of the economy, the acquisition of investment grade will be delayed.

According to the Foundation for Economic & Industrial Research-IOBE, if the upcoming elections do not disrupt the course of the economy, the continued improvement is very likely to lead to the desired upgrade towards the end of 2023, accelerating the improvement of the economy from then on. Apart from the other important factors of improving the economy, the stability of the fiscal balance is a crucial condition. Achieving primary surpluses as soon as possible, and especially in a sustainable manner, is a prerequisite for the systematic development of the Greek economy.