Fitch ratings agency has lowered its outlook on Greece’s credit rating, from positive to stable, amid the financial impact the coronavirus measures are taking on the country's economy.
In its report issued late Thursday night, the ratings agency did not downgrade Greece’s credit rating, leaving it at the BB level it had upgraded it to in January.
Greece has been gradually emerging from a decade-long financial crisis that wiped out a quarter of its economy, and its credit rating is still two to four notches below investment grade for major rating agencies, although it has seen some upgrades. Fitch’s lowering of its outlook indicates it is unlikely to upgrade the country’s rating again soon.
Greece saw its ratings plunge in 2010, when it was revealed that key financial data had been misreported and the budget deficit would be several times the initial forecast. The country lost market access as investors shunned its bonds, and was forced to sign a series of international bailouts to keep afloat.
Fitch said its revision of the outlook to stable “reflects the significant impact of the COVID-19 crisis on economic activity, the public finances and external accounts.”
The ratings agency expects Greece’s gross domestic product to fall by 8.1% this year, “reflecting the necessary restrictive measures to slow the spread of the pandemic, the global recession and sharp fall in tourism,” which is a major industry in the country. It said it expects “some recovery in activity” in the second half of 2020 and in 2021, and predicted GDP growth reaching 5.1 percent next year.
“The extent of the fall in GDP and subsequent recovery are highly uncertain. There are downside risks to our projections around the extent and duration of the coronavirus outbreak,” Fitch said. “Prolonged lockdown periods or a second wave of infections in Greece and other European countries would imply much larger declines in output in 2020 and a weaker recovery in 2021.” [AP]