May 27, 2023
Moody’s, the financial rating agency, has maintained Portugal’s ‘Baa2’ rating while upgrading the outlook from stable to positive. Moody’s cites the potential for sustained improvement in Portugal’s credit profile, driven by ongoing economic and fiscal reforms, household and corporate deleveraging, and the recovery of the banking sector. The affirmation of the rating reflects Portugal’s economic diversification, relatively high wealth, and strong institutional framework. Moody’s forecasts a GDP growth rate of 2.2% in 2023 and an average growth rate of 2% over the next five years. The agency expects a reduction in the debt burden to 103% of GDP by 2024. Moody’s may consider a rating upgrade if debt metrics continue to improve steadily, economic growth remains solid, and the impact of economic shocks on debt is manageable. Conversely, the outlook could return to stable if the debt burden increases, political support for prudent budgetary policies weakens, or economic growth deviates significantly from current forecasts. The last rating action by Moody’s for Portugal occurred in September 2021 when the rating was upgraded to ‘Baa2’ with a stable outlook.
Source: The Portugal News
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