Fitch Ratings: Signal for Greek Economy The upgrade of the worthy

Fitch Ratings International Evaluation House, in its first appointment with the Greek economy this year, upgraded the prospects of the position of stable Positive (stable), laying the foundations for yet another upgrade on the second step of the investment grade during the November rating.

According to the International House, the Outlook revision stems mainly from the large surplus of the budget and the sharp decline in public debt, followed by the prudent and reliable budgetary framework, the limited risks of costs, but also the resistant economic growth, which remains well above the European average.

The catalysts of the upgrade

Fitch points out that the total surplus of 1.3% and primary 4.8% for 2024 exceed house estimates, while predicting that the total surplus in the budget of 2025 and 2026 will be 1%.

Remarkable is the finding of the vertical decline in public debt. Greece has achieved the highest decline in debt after the pandemic among the countries evaluated by Fitch. It is also noted that high cash reserves of EUR 36 billion (16% of GDP) are sufficient to cover all debt maturities, in this case bond expires, the next three years. The house predicts that the rapid debt reduction will continue in the medium term, with the rate of debt to GDP approaching a basic scenario of 120% by 2030.

Particular reference is made to the prudent and reliable budgetary framework, based on which the country is moving. It underlines the government’s strong commitment to fiscal prudence and stresses that the latest official fiscal provision, namely the briefing of the mid -term budget plan of May 2025, is fully aligned with the new EU budgetary framework.

Fitch focuses on the country’s durable economic growth, which runs at 2.3% in 2024. It estimates that growth will remain above 2% in 2025 and 2026, multiple 0.4%, which is the provision of the house for the eurozone average. The report highlights the actual increase in citizens’ income and enhancing employment, at the same time that the rise in investment continued.

The impacts from duties

He also estimates that the immediate risks to Greece from the World Trade War are small, as exports to the US are only 4% of total exports, well below the EU average. Nevertheless, a more serious shock to the great EU economies could have significant impact on Greece.

Defensive expenses

Fitch also stresses that historically Greece historically had higher defense spending than most EU countries, close to 3% of GDP, according to NATO definition. Therefore, there is less pressure to increase these costs, further reducing the medium -term budget risks.

The ‘persistent’ current transaction deficit

In contrast, the International House emphasizes that the current account deficit (CAD) was 6.4% of GDP in 2024, significantly higher than the « BBB » average of 0.3% and largely unchanged from 6.2% of 2023. Capital goods, while surplus tourism only increased moderate. Structurally, the low savings rate is the main reason for the significant deficit, with import intensity investments expected to step up the pressure in the medium term. Participation in the eurozone alleviates the risks of external funding and Fitch does not expect any disturbance in external capital flows.

Reinforced banking sector

Fitch Evaluation House upgraded the ratings of the four systemic banks by one level in March 2025, reflecting improvements in Greece’s operating environment and bank credit profile, including a longer history of healthy profits, integration Funding from deposits.

Fitch expects that lending and supplies revenue will continue to rise in the medium term, despite recent market volatility. Acquisitions will increase the international presence and differentiation of revenue, although banks’ focus will remain mainly domestic.

Bank-State Link: Despite the improvement in the banking sector, as an inherited issue, there is still a unique close link between the state and the banks due to the large share of deferred tax credit (DTCs; 12 billion euros, 50% of the Tier 1st shares).

The DTCs remain a possible obligation for the state, which is absent from all other eurozone members. Recent banks’ plans to accelerate the depreciation of DTCs should help normalize their capital structures in the coming years.

The next appointments with the houses

The baton is taken on May 30, Scope Ratings, who finally made the surprise on December 6th and upgraded the Greek economy to the BBB, on the second step of the Outlook investment level.

And follow:

• September 5 DBRS
• September 19 Moody’s
• 17 October S&P
• November 7th Scope Ratings
• November 14 Fitch Ratings

Source: OT