Stable Ratings Backed by Credible Policy Framework

The rating agency Morningstar DBRS has confirmed Greece’s long-term issuer ratings at BBB for both foreign and local currency debt, while also affirming the country’s short-term issuer ratings at R-2 (high). All ratings maintain a stable outlook, reflecting a balance in short-term credit risks.

Strong Economic Performance Driving Optimism

The agency’s report highlights Greece’s impressive economic performance, noting a 2.3 percent growth in 2024—well above the euro area average of 0.9 percent. This robust domestic demand, underpinned by employment gains and EU-funded investments, has been the key driver of GDP expansion. The European Commission forecasts similar growth for 2025, reinforcing a positive economic outlook.

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Fiscal Discipline And Structural Reforms Strengthening Confidence

Greece’s steady economic progress has been complemented by recurring primary budget surpluses and a consistent decline in its debt-to-GDP ratio, with projections suggesting a drop from 164 percent in 2023 to 141 percent by 2026. Morningstar DBRS attributes the BBB ratings to Greece’s credible policy framework, membership in the European Union, and commitment to reforms that bolster governance, improve the business environment, and enhance debt sustainability.

External Risks And Future Considerations

Despite these positives, the agency cautions that Greece remains exposed to external risks common across EU economies. Any shift in the geopolitical or global trade environment that dampens external demand could impact exports and the broader economic landscape. An upgrade in credit ratings may be achieved with further reductions in the public debt ratio and sustained primary surpluses, while any prolonged fiscal weakness or reversal of reforms could lead to a downgrade.

Outlook For Long-Term Fiscal Sustainability

Looking ahead, the International Monetary Fund projects that Greece’s primary budget surplus will average 2.4 percent of GDP through the end of the decade, with public debt expected to fall to 125 percent of GDP by 2030. However, the ratings remain constrained by the country’s high public debt, small economic size, and sizable current account deficit. A prudent fiscal approach and ongoing economic reforms will be crucial to ensuring Greece’s sustained creditworthiness.