DBRS Ratings GmbH (Morningstar DBRS) has confirmed Greece’s credit rating at BBB grade, while maintaining stable economic outlook prospects. The agency also confirmed the country’s short-term debt rating at R-2 (high), emphasizing that economic risks currently appear balanced. According to Morningstar DBRS analysis, economic and fiscal developments over the past year have remained favorable. The Bank of Greece estimates that real GDP increased by 2.1% in 2025, thanks to investment strengthening, rising private consumption, and increased tourist arrivals. Meanwhile, fiscal performance was enhanced not only by favorable conditions but also by reforms that improved tax compliance and increased public revenues. Between the fourth quarter of 2024 and the third quarter of 2025, the general government budget recorded a surplus of 2.6% of GDP. Positive fiscal developments and economic growth also contributed to reducing public debt, which nevertheless remains particularly high. General government gross debt declined to 149.7% of GDP in September 2025, from 158.6% a year earlier.
Growth prospects and key risks
For the coming years, the Greek government estimates further reduction of the debt-to-GDP ratio to 138.2% by the end of 2026, based on continued growth, significant primary surplus, and early public debt repayments. The economy is expected to continue growing at relatively strong rates. The European Commission forecasts GDP growth of 2.2% in 2026 and 1.7% in 2027, with consumption strengthening from increased employment and rising real wages as inflation declines. However, DBRS highlights significant external risks, such as potential escalation of geopolitical tensions or a new energy price shock. Prolonged high energy prices could bring back inflationary pressures and limit household purchasing power. Despite the positive trajectory, the Greek economy continues to face structural challenges. Labor productivity remains lower than the European Union average. According to Eurostat, nominal productivity per worker in Greece corresponded to only 70.1% of the EU-27 average in 2023.
Fiscal performance and primary surpluses
Morningstar DBRS estimates that Greece will continue to show significant primary surpluses. After a primary surplus of 4.8% of GDP in 2024, preliminary data shows even stronger performance in 2025. On a four-quarter rolling basis through the third quarter of 2025, the primary surplus reached 5.2% of GDP, exceeding the 3.6% target. The strong fiscal picture is mainly attributed to increased revenues. During the first nine months of 2025, total general government revenues increased by 9.1%, compared to a 5.1% increase in expenditures. Reforms that enhanced tax compliance played a significant role, such as the digital work card and automatic transmission of sales data from POS systems to tax authorities. For 2026, a slight decrease in the primary surplus to 2.8% of GDP is projected, as more expansionary measures are adopted, such as income tax reductions, pension increases, and higher investment expenditures. Meanwhile, defense spending is projected to increase from 2.3% of GDP in 2025 to 2.6% in 2026.
Public debt and external imbalances
Despite steady de-escalation in recent years, Greece continues to have the highest public debt in the eurozone. However, refinancing risks are considered limited due to the favorable debt structure. The average maturity duration reaches 18.4 years, while a significant portion of debt is owed to official creditors such as ESM and EFSF. Additionally, the Greek state has significant cash reserves, amounting to €39.6 billion in 2025 (approximately 15.9% of GDP), while the total debt is at fixed interest rates after hedging transactions. However, the rating agency notes that the current account deficit remains high. Although it decreased from 7.2% of GDP in 2024 to approximately 5.7% in 2025, it continues to be significantly larger than pre-pandemic levels. Increased domestic demand and investments led to higher imports, which more than offset the increase in tourism revenues.
Banking sector improvement
DBRS highlights significant improvement in the financial condition of the Greek banking system. The non-performing loans ratio dropped drastically to 3.6% in September 2025, from 40.6% in 2019, mainly thanks to the Hercules program for reducing bad loans. Meanwhile, banks have strong liquidity ratios and adequate capital base, with the CET1 capital ratio at 16.1% in the third quarter of 2025. However, the agency notes that capital quality continues to be affected by the high participation of deferred tax credits (DTC).
Political stability and reforms
Morningstar DBRS estimates that political stability in the country will remain high, as the government has a strong parliamentary majority after the 2023 elections. The next elections are expected to be held by July 2027. The agency notes that there is broad political consensus on key economic policies and reforms, which reduces the risk of significant course changes. It also emphasizes that institutional quality remains lower compared to other eurozone countries, particularly regarding the duration of judicial procedures and the rule of law index. Overall, Morningstar DBRS believes that recent years’ reforms, improved economic governance, and Greece’s participation in the European Union and eurozone constitute key factors supporting the country’s credit rating, despite structural weaknesses and high public debt levels.
