Moody’s maintained Portugal’s sovereign rating this Friday and the “outlook” is stable, the agency said in a statement.
The agency continues to give Portugal a rating of ‘A3’, which corresponds to the seventh grade of the quality investment category (i.e., four levels above “junk”).
It was in November last year that the rating for the ‘A’ club increased, with a stable outlook, placing the risk assessment above Spain – something that had never happened.
By maintaining a stable perspective, Moody’s remains below the positive outlook assigned by Standard & Poor’s and Fitch.
Analysts’ expectation was that the agency could also raise the outlook, but Moody’s reports that the stable outlook reflects that the firm’s vision for Portugal’s credit profile and ‘A3’ rating remains balanced.
“The possibility of more positive trends in economic and fiscal robustness that we expect is offset by potential downside factors such as weaker external demand and more complex policy implementation due to parliamentary fragmentation”says the report.
The ‘A3’ rating also reflects challenges such as “the still high public debt ratio and compared to countries with a similar ‘rating’, although this ratio has fallen consistently since the 2020 peak.”
The competitive economy and the diversified economy, the relatively high levels of wealth and the high institutional strength These are the factors that support the rating.
“Economic and fiscal performance continues to be in line with our expectations. The economic and budgetary outlook remains solid”, says the statement.
The agency forecasts real GDP growth of 1.6% in 2024 and 2.2% in 2025, after 2.5% in 2023. “Continued budget deficits coupled with robust nominal GDP growth should keep the public debt index on a strong downward trend” until 2025, says Moody’s.
The rating could be pressured upwards by the acceleration of growth, points out the agency, “supported by a more effective implementation of investment projects and reforms linked to Portugal’s PRR”.
The prospects for a faster fall in public debt, linked to stronger growth, would also be rating-friendly, Moody’s says.
Source: www.jornaldenegocios.pt
