Moody’s: Affirmed Greece’s creditworthiness – Forecasts 5.3% growth in 2022

The credit rating agency Moody’s has confirmed the creditworthiness of the Greek economy at the Ba3 level.

In a statement, the house says that the confirmation of the Greek debt at the Ba3 level with a stable outlook balances the improvements in Greece’s credit fundamentals over the past two years with the ongoing challenges amid an increasingly unfavorable macroeconomic environment in Europe.

In particular, notes Moody’s, the Greek authorities have made progress in reducing banks’ non-performing loans, which frees them to provide loans and support the economy.

In addition, the Greek economy has recovered quickly from the financial shock due to the pandemic, and the prospects are good for increased investment, in light of the large resources from the EU and foreign direct investment, which will support Greece’s economic strength.

However, the house adds, there is a high risk of a deep recession in the Eurozone, persistent inflation, more prolonged disruption in energy supplies, tighter global liquidity and withdrawal of monetary support from the European Central Bank.

Moody’s forecasts Greece’s real GDP to grow 5.3% this year, led by very strong tourism, domestic consumption and investment as well as improved product exports.

For 2023, it forecasts a sharp slowdown in growth to 1.8% as high inflation will erode household purchasing power and rising interest rates could weigh on investment.

For inflation, it predicts it will be close to 9% at average levels this year and around 4% in 2023.

Moody’s expects strong growth and primary deficit reduction to reduce public debt below 180% of GDP at the end of 2022, but notes that Greece still has one of the highest debt burdens in the world and sustainability of its debt depends on support from its official creditors.

RES-EMP

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