THE Moody’s House had proceeded to upgrading the Greek economy and indeed by two levels just six months ago, on September 15, 2023. No further upgrade was expected in such a short period of time – the constant practice of rating agencies is to allow a reasonable period of time between upgrades, both in terms of the rating and in terms of the outlook.

This was reported by the Ministry of National Economy and Finance regarding the announcement of the rating agency last Friday and the maintenance of the credit rating of the Greek economy at Ba1 with stable prospects, without giving the investment grade.

According to the Ministry, Moody’s is the last house from which we expect the investment grade that Standard and Poor’s, Fitch, DBRS, R&I and Scope have already awarded to the Greek economy. The benefits of the upgrade are already visible in the Government’s borrowing costs and in the de-escalation of spreads which are already at lower levels than other eurozone countries.

It is added that the main message that emerges from the Moody’s report is that: A condition for the upgrade to the investment grade is the continuation of the government’s policy for fiscal stability on the one hand, and the acceleration of reforms on the other. The house also highlights the significant progress achieved in the previous years in seven different areas, specifically noting among others the following:

1.Growth: This is set at 5.6% in 2022 and despite slowing to 2% in 2023, mainly due to persistent inflation and interest rates, Moody’s forecasts real GDP growth of 2.4% in 2024 and 2.3 % in 2025, supported by domestic demand, exports, EU funds and private investment.

2. Fiscal deficit: Reduced rapidly to less than 1% of GDP in 2023 from 2.4% in 2022 (according to the house’s estimates as the official figures from ELSTAT have not yet been announced). Moody’s projects the fiscal deficit to stabilize at 0.9% of GDP in 2024-25, while primary surpluses will hover around 2% of GDP.

3. Public debt: estimated at 161% of GDP at the end of 2023 from 172.6% in 2022 and is projected to further decrease to 148% at the end of 2025.

4. External balance: Moody’s sees the current account deficit narrowing to 6.4% of GDP in 2023, from 10.3% in 2022.

5. Inflation: Expected to decline further to 2% in 2024-2025.

6. Red loans: the “significant reduction” of NPLs in previous years is highlighted.

7. Reforms: Moody’s notes that continued reforms that improve the functioning of Greece’s labor and product markets and achieve fiscal primary surpluses may yield larger than expected positive effects.

In conclusion, the officials of the ministry conclude, Moody’s analysis records the significant progress made by the Greek economy and predicts a continuation of the positive economic developments.