Fitch Ratings affirmed Greece’s ‘BB’ credit rating with a stable outlook on Friday, forecasting a 7.9% recession this year as a result of the pandemic, followed by a 5.1% rebound next year.
The rating agency said in a statement that the assessment reflects the high level of per capita income in Greece, which is far above the average rate of countries with a rating of ‘BB’ or ‘BBB,’ adding that the country performs far better than many countries below investment grade on the governance level.
On the other hand, the medium-term prospects for growth remain weak, there is a high stock of nonperforming loans in the credit sector and both the general government debt and the external debt are particularly high, Fitch noted. The stable outlook reflects a level of confidence in the sustainability of public finances after this year’s financial shock from the pandemic.
After the 0.9% annual contraction of the economy in the first quarter and the 1.6% quarterly drop, Fitch says the decline accelerated over the second quarter, during the lockdown.
It also concedes that the 5.1% rebound projected for 2021 is risky as the course of the pandemic remains unknown and a second wave remains possible.