Tourism Helps Greece Get Closer to Investment Grade, Say Credit Rating Agencies

Moody’s and DBRS maintain ‘favorable’ credit ratings for Greek economy

Greece came one step closer to achieving investment grade, which is a top government priority, after international credit rating agency Moody’s said it would be maintaining its stable outlook (Ba3) and Canadian agency DBRS said it was leaving its credit rating unchanged at BB (high) with a stable trend.

The two agencies attributed the Greek economy’s resilience to a very strong year in tourism.

The reports come after Greece exited the enhanced surveillance in August and following the announcement by Prime Minister Kyriakos Mitsotakis at this year’s 86^th Thessaloniki International Fair (TIF) of a fresh round of support budgeted at 5.5 billion euros to ease the impact of the ongoing energy crisis.

The Moody’s report said that the Greek government had made progress in reducing banks’ non-performing loans (NPL) and that the economy has managed to recover quickly from the pandemic-induced economic shock. It added that prospects were good for increased investment in view of EU funding and foreign direct investment, which support Greece’s economic strength.

Moody’s forecasts Greece’s real GDP to grow 5.3 percent this year, led by tourism, domestic consumption, investment and exports.

However, on the down side, the agency said there still was a high risk of a deep recession in the euro area, persistent inflation, prolonged disruption of energy supplies, tighter global liquidity and withdrawal of monetary policy support from the European Central Bank (ECB).

On its part, DBRS said the rating reflects Greece’s commitment to ensuring the sustainability of its fiscal sizes despite the adverse global economic effects of the Russia-Ukraine war, inflationary pressures and the energy crisis.

It goes on to refer to Greece’s robust tourism figures which it said will help the Greek economy this year, however, economic uncertainty related to geopolitical events still poses a serious risk.