Greece’s Economy Awaits Moody’s Verdict on Investment-Grade Rating

Greece’s economy is bracing for a pivotal moment as it anticipates the final seal of approval from Moody’s today, Friday March 14, the last of the major credit rating agencies yet to grant the country an investment-grade rating. Expectations remain cautious, given Moody’s reputation as the strictest of the agencies.

Later tonight, Moody’s will present its assessment of the Greek economy, with analysts predicting that its report will largely reiterate previous recommendations and challenges. This comes after its last verdict in September, 2024, when it shifted Greece’s outlook to “positive.” This methodological shift typically indicates that an upgrade could be on the horizon within the next 12 to 18 months.

However, a key factor in today’s decision will be how much weight Moody’s places on global economic developments, as international uncertainty, is impacting economies worldwide both directly and indirectly. This uncertainty could be a decisive factor in delaying an upgrade, as Moody’s may prefer to adopt a wait-and-see approach.

Investor sentiment this week suggests heightened anticipation. The stock market has reflected strong performance, with the general index showing resilience and a lack of inward-looking caution. Moreover, trading activity has increased despite prevailing economic uncertainty, indicating optimism in the financial sector.

Even if Moody’s refrains from upgrading Greece’s rating, investors have taken comfort in last week’s decision by the Canadian rating agency DBRS, which elevated Greece’s creditworthiness to BBB with a stable outlook, up from BBB (low) with a positive outlook.

Following its previous outlook upgrade last September, Moody’s also released a detailed explanatory report, outlining the key factors influencing its decision-making, which remains highly relevant today. The agency identified three main catalysts for its evaluation.

First, the absorption of EU Recovery Fund resources plays a crucial role, with Greece’s performance deemed satisfactory but not without challenges. Second, Greece’s economy remains vulnerable to global market volatility, with high geopolitical tensions creating significant uncertainty. Lastly, the ongoing geopolitical strains, particularly in Europe due to the war in Ukraine, are a major concern.

These tensions are also reflected in the European Commission’s ReARM program, designed to bolster defense and resilience within the EU.