After consecutive upgrades in recent years, credit rating agencies are now taking a wait-and-see approach toward the Greek economy. Moody’s maintained the country at Baa3 grade with a stable outlook, without proceeding to a new upgrade. This decision, while not surprising, shows that international analysts want to first verify whether the positive trends will be sustainable.
Despite positive elements –strong reform progress, increased investments and banking system recovery– Moody’s report also highlights significant challenges. Public debt, although decreasing substantially as a percentage of GDP, remains at high levels in absolute numbers and will continue to burden the economy until the end of the decade. Additionally, the risk created by demographic developments is emphasized, as population aging could limit the potential growth rate, even if reform efforts continue.
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