The Greek economy has solid foundations, according to Fitch Ratings and its latest projections. The agency specifically points to the continuation of Greece’s strong fiscal performance, while continuing to rank its economy among those that stand out for their fiscal stability. Notably, Fitch Ratings highlights that Greece is thriving at a time when rising borrowing costs and pressure on government spending are weighing on the outlook for several European countries.
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Fitch Ratings: Economic growth remains resilient across western Europe
In its latest report on western European sovereign ratings, the American agency notes that economic growth across the region remains broadly resilient despite ongoing external challenges. However, fiscal performance and public debt trajectories show significant divergence among European nations. Fitch estimates that fiscal pressures intensified in 2026 for most countries, driven primarily by energy subsidies, increased defence spending, higher debt servicing costs, and expenditure related to ageing populations.
Against this backdrop, the agency expects Greece, Cyprus, and Portugal to continue delivering fiscal outperformance, in contrast to other major European economies such as Germany, where a widening fiscal deficit is forecast due to increased infrastructure and defence investment. Fitch’s new report comes just weeks before the next scheduled review of the Greek economy, set for Friday, 6 November 2026.
At the previous review on 8 May 2026, Fitch had maintained Greece’s credit rating at the “BBB” grade with a stable outlook, citing improved fiscal figures and progress in reducing public debt. The agency acknowledged that the country’s strong fiscal performance is underpinned by growth in tax revenues, improved tax compliance, and effective containment of public expenditure. Greece’s positives also include the ongoing reduction of its public debt ratio, although the overall debt level remains a key constraint on the country’s credit rating.
Public debt set to rise in 12 eurozone countries
The agency forecasts that between 2026 and 2028, public debt as a percentage of GDP will increase in 12 Eurozone countries, including France and Germany, while in nine countries it is expected to remain stable or decline.
Special mention is made of the sharp rise in government bond yields following the outbreak of conflict between the US and Iran, a development that has tightened financing conditions for European governments. Fitch believes the surge in yields may be overstating the immediate risk to sovereign budgets, as most European countries hold public debt with relatively long average maturities.
This means that the rise in borrowing costs is not immediately passed through to total debt servicing expenditure. Nevertheless, the agency warns that persistently elevated yields increase medium-term fiscal pressures, narrowing the headroom available to sustain sovereign credit ratings.
France appears particularly strained, where a significant widening of spreads reflects the country’s weaker fiscal position as well as uncertainty ahead of the 2027 elections.
Despite these fiscal challenges, Fitch strikes a more optimistic tone on Eurozone growth in 2026, having recently revised its forecasts upward following better-than-expected economic performance in the second quarter. Portugal stands out in particular, having been upgraded by the agency in September to “A+” with a stable outlook, after its outlook was previously raised to positive back in March.
