Morgan Stanley: Greece’s growth at 7.9% this year, possible upgrade by Moody’s

Morgan Stanley expects the upgrade of Greece from Moody’s next Friday, with “weapon” the impressive growth that the Greek economy has recorded this year, while at the same time predicting high growth rates this year.

Specifically, it estimates that the house will “raise” Greece’s credit rating by one notch to Ba2 from Ba3, and will thus be aligned with the S&P, Fitch and DBRS, which rate the country two steps below the investment grade.

It is worth noting that according to the new forecasts of Morgan Stanley, which he presents in a separate report, the growth of Greece this year will move to 7.9%, while the next two years will move at a rate of 2.7%. Public debt is estimated to be on a downward trajectory, although only in 2023 will it begin to form below 200% of GDP.

The resources of the Recovery Fund and the ambitious plan “Greece 2.0”, according to the house, support the strong development of the country, while an important support is the recovery of tourism. Of course, this ambitious national recovery plan poses risks associated with resource absorption, he points out.

It is noted that Moody’s had observed a “silent fish” during the previous scheduled evaluation in May, and thus has not changed the evaluation of Greece since November 2020 when it had upgraded it by one notch, from B1, with positive prospects. It had also preceded more than a year of waiting before this 2020 upgrade as the previous change of its rating had been made in March 2019 with a double upgrade.

It is worth noting that in a report earlier this year the house had sent a “message” about how it will move in terms of its ratings. In particular, he had stated that he would proceed with fewer evaluation actions from 2020, as a result of the ongoing global economic recovery. If the financial and credit conditions develop as expected, this will lead to confirmation of the scores it gives rather than extensive upgrades. “Most of our current assessments are in a good position to recover from the pandemic,” he said.

However, with regard to Greece in particular, Moody’s has indicated that its rating could be upgraded if further progress in structural reforms yields tangible results in the form of stronger investment and further strengthening and stabilizing medium-term growth prospects. A faster-than-expected reduction in the government debt ratio would also be positive for its assessment, as would resolving the ongoing quality issues of the banking sector’s assets.

Eleftheria Kourtali