ATHENS – Prime Minister Kyriakos Mitsotakis’ luring of more foreign investors an tourism have boosted Greece’s economy enough to be rated just one rung below investment grade but faces obstacles, including coming elections.
Scope ratings agency has Greece as BB+ and said the economic outlook is generally positive but cautioned that it depends on maintaining momentum during the waning COVID-19 pandemic, said FX Empire.
The economy grew 5.6 percent in 2022 as tourism roared back and the agency forecast medium-run growth of about 1 percent but problems remaining in a rigid labor market, bad loans hindering banks – who sold off much of them – and political uncertainty as Mitsotakis faces the major opposition SYRIZA again.
Scope said that growth will slow to 1.3 percent in 2023 and then to percent in 2024 and average 1.4 percent through 2027 but doesn’t expect a recession and noted that Greece has outperformed the European Union average.
Another positive factor is falling debt as payments continue on 326 billion euros ($344.26 billion) in three international bailouts that ran from 2010-18 and will take decades to finally pay off.
The debt-to-Gross Domestic Product (GDP) has fallen from 171 percent in 2022 to 166.5 percent in 2023 and estimated at 150.5 percent by 2027 after hitting a high of 206.3 percent in 2020 and considered unsustainable.
“High inflation contributes to reduced debt ratios but inflation might also prove a primary obstacle to Greece’s path to investment grade if borrowing rates were to rise again,” the ratings agency said.