Greek Economy: Upgrades expected from Moody’s and S&P

The effects on the Greek economy after the re-election of the New Democracy are expected to be positive, according to Moody’s and Standard & Poor’s.

International rating agencies note Greece’s attractiveness for investment and the prospect of one of the world’s largest debt reductions.

International Ratings Agencies: Greek economic activity will accelerate in the second half

Moody’s

The importance of the re-election of Kyriakos Mitsotakis and New Democracy is emphasized by Moody’s in a statement on Monday. “The electoral victory of the New Democracy party is credit positive because it paves the way for another four-year term of Kyriakos Mitsotakis, which will ensure the continuity of Greece’s fiscal and economic policies”, he notes characteristically.

“In particular, the focus on improving the business environment and the health of the banking sector, combined with the implementation of reforms under Greece’s National Recovery Plan, will boost economic growth. Adding the commitment to fiscal consolidation and increasing primary surpluses, the continuation of current economic policy significantly improves the prospects for reducing Greece’s public debt. Keeping the outlook for steady GDP growth in the coming years, we believe Greece will see one of the largest debt reductions globally, with general government debt falling below 150% of GDP by 2025, from 171.3% in end of 2022”, the international house emphasizes in its announcement.

“Although Greece’s debt ratio will remain quite high in the coming years, the debt burden has become more sustainable, thanks to favorable eurozone loan repayment terms and debt relief provided by creditors since 2017. Greece’s interest payments as a percentage of government revenue are significantly low and will remain so for a long time,” Moody’s adds.

Standard & Poor’s

Standard & Poor’s, in turn, gives special weight to the re-election of New Democracy, noting that the risks of potential political instability are eliminated.

Specifically, he emphasizes that “The ruling New Democracy party secured an absolute majority in the elections of Sunday, June 25. Consequently, the new government should be able to continue pro-growth reforms, including reducing the turnaround time of court cases and modernizing the regulatory framework for business.”

“The reforms aim to improve Greece’s attractiveness for business investment. Reform and fiscal outcomes will be key criteria for our next decision on Greece’s rating. The next scheduled review of our credit rating will take place on October 20, 2023,” concludes the international rating agency.