Moody’s Upgrades Greece’s Economic Outlook to Positive Amid Banking and Fiscal Reforms

Moody’s recently updated its outlook on the Greek economy from stable to positive, while maintaining its credit rating at Ba1. This change indicates a positive forecast for Greece’s economic performance and reflects the increased likelihood of sustained improvements in the banking sector, expected economic growth, and fiscal strength.Economy Minister Kostis Hatzidakis highlighted three main reasons for this upgrade: faster economic growth, improved fiscal performance due to measures against tax evasion, and a strengthened banking system. This marks the second positive outlook modification for Greece, following a similar action by DBRS last week.Deputy Economy Minister Nikos Papathanasis praised the upgrade as recognition of the systematic efforts of Kyriakos Mitsotakis’ government in driving progress and potential for the country.Moody’s report emphasizes significant improvements in Greece’s banking system, noting Greek banks’ financial soundness is nearing the EU average. The report also pointed out that the reduced ratio of non-performing loans and the sale of stakes in major banks reflect improved financial health and diminished liability risks for the government.The government’s firm commitment to fiscal prudence and reform has strengthened Greece’s revenue base, potentially allowing for higher primary surpluses and faster public debt reduction. Although Greece’s economic model largely relies on consumption and services, long-term growth prospects are supported by substantial EU investment, which will encourage diversification and strengthen the economy.Despite Greece’s progress, challenges remain, such as a high public debt-to-GDP ratio and ongoing structural issues. However, Greece’s robust reform track record and commitment to sound fiscal policies paint an optimistic picture of future economic resilience and growth.

link: https://greekcitytimes.com/2024/09/14/moodys-upgrades-greeces-economic-outlook-to-positive-amid-banking-and-fiscal-reforms/