The credit rating agencies S&P and DBRS, in reports issued on Friday, have downgraded the Greek economy’s outlook to “stable” on concerns about the impact of the Covid-19 pandemic.
S&P affirmed the country’s ‘BB-/B’ ratings and noted that “the stable outlook reflects the view that Greece’s fiscal policy buffers offset risks to creditworthiness emanating from Covid-19’s implications”. Its report notes that Greek authorities have quickly succeeded in stabilising the percentage of Covid-19 cases and deaths but that the Greek economy is expected to shrink by about 9 pct in 2020 due to the virus, before rebounding in 2021.
It also noted that the government has significant fiscal buffers to cope with the economic and fiscal repercussions of the pandemic, which support Greece’s creditworthiness at the current level.
DBRS also affirmed Greece’s BB (low) rating and revised the trend to stable due to the pandemic’s impact, citing the government’s strong commitment and momentum in implementing a reformist agenda. It noted that the pandemic has restricted economic activity and will probably lead to a recession, while the time of recovery remains uncertain. It said the Greek government’s emergency fiscal measures will alleviate the sharp economic impact but the economy was likely to shrink significantly in 2020, due to its reliance on tourism and shipping, with unemployment rising. It forecast a worsening public debt to GDP ratio and fiscal balance of uncertain duration.