A new chapter is opening for the Greek economy as international credit rating agencies upgrade Greece, further strengthening its position in the markets and building a greater reserve of credibility. This comes at a time when major European economies — including Italy, France, the United Kingdom, and even Germany — are being rattled by sluggish growth, rising deficits, and climbing bond yields, while Greece is moving in the opposite direction.
Read also: Mitsotakis on the double upgrade by Moody’s & Scope: “Greece is an example of resilience and rapid public debt reduction”
What we gain from the rating upgrades: knocking on the door of the “top league”
Late on Friday evening, the upgrade came from German agency Scope Ratings, which raised Greece by one notch to “BBB+” from “BBB” — levels not seen since 2010 — while maintaining a stable outlook, effectively placing the country’s credit rating in the anteroom of the top investment tier. This was followed by the most stringent of all agencies, American firm Moody’s, which kept its rating at “Baa3” but upgraded the outlook from stable to positive, opening the door to an even higher rating in the future.
The double upgrade sent a clear vote of confidence that the Greek economy, despite the risks, has not merely managed to stay afloat — it has the potential to perform significantly better. These are two distinct moves, but they share a common thread: both agencies believe the Greek economy has become more resilient, and that fiscal consolidation, structural reforms, and strong investment activity are creating the conditions for a further improvement in the country’s credit profile, with a horizon set toward the end of the decade, when the goal is for Greece to rank among the top-tier economies in the Eurozone.
The new upgrades do not automatically translate into immediate wage increases or reductions in taxes and consumer prices. Their impact is primarily indirect, but particularly significant over the long term. An economy with a higher credit rating is considered a safer borrower. This in turn contributes to reducing the cost of government borrowing — at a time of broadly rising yields even for stronger countries, this means containment for Greece — and, as improvements gradually filter through the financial system, it can create better financing conditions for borrowers, banks, businesses, and investors.
The result could be a more virtuous cycle: lower cost of capital, more investment, greater economic activity, new jobs, and higher incomes — outcomes we have already seen materialize during the first wave of upgrades and Greece’s return to investment-grade status. At the same time, the gradual reduction of public debt eases the pressure that debt servicing costs place on public finances, creating more room for support policies, provided these remain consistent with fiscal rules.
The Bank of Greece has noted that sovereign upgrades have already contributed to reducing the funding costs of Greek banks and improving their access to capital markets. The central bank’s research also estimates that an upgrade to investment grade compresses government bond yields and transmits through the banking system via lower funding costs. For households, this means that if the ongoing de-risking trend continues and is passed on through the banking market, it creates a more favorable environment for mortgage, business, and investment loans.
The rationale
- Scope bases its upgrade on a combination of strong growth, high primary surpluses, investment activity, and ongoing reforms. It estimates that the Greek economy grew at an average rate of 2.1% during the 2023–2025 period, compared to approximately 1% across the EU, and projects growth of 1.9% in 2026 and 1.7% in 2027. The agency places particular weight on the fiscal picture, forecasting a primary surplus of approximately 4.1% of GDP in 2026, and estimating that public debt will fall to around 136% of GDP in 2026 from 146.1% in 2025, declining further to near 110% by 2031.
- Moody’s moves in the same direction. It maintains Greece at “Baa3” while upgrading the outlook to positive. The agency notes that structural and institutional reforms are strengthening economic and fiscal resilience more than initially anticipated. It also believes this greater resilience could lead to higher structural growth rates and support the continuation of the multi-year debt reduction effort, including early repayments of legacy loans.
“An island of stability”
Prime Minister Kyriakos Mitsotakis noted in a related post that “yesterday’s upgrades confirm Greece’s image as an island of political and economic stability,” adding that “Greece moves forward despite the stormy weather — with a plan, consistency, hope, and results.” Finance Minister Kyriakos Pierrakakis stated that “Greece is being upgraded at a moment when international markets are under strain. And that carries tremendous value. […] Credibility is built through results.”
Originally published in Apogeumatini
