S&P Global Ratings announced on Friday that it has raised Portugal’s unsolicited long-term foreign and local currency sovereign credit ratings to A- from BBB+, with a positive outlook.
Factors Contributing to the Upgrade
The upgrade is attributed to Portugal’s “steep deleveraging,” which is driving an enhancement in the country’s external financial position and reducing external liquidity risks. Additionally, S&P highlighted its belief that Portugal’s government debt-to-GDP ratio, already below pre-pandemic levels, will continue on a downward trajectory.
Economic Outlook
While Portugal’s GDP growth is forecasted to slow down to 1.4% this year as compared to 2.3% in 2023, S&P remains optimistic about the country’s economic prospects. The agency mentioned that moderate growth is expected to be sustained by robust tourism performance, increased public investments, a recovery in private consumption, along with lower inflation rates and improved financing conditions.
Future Expectations
Moreover, S&P expressed confidence in the potential for further enhancements in Portugal’s external and government debt positions, which is the basis for the positive outlook associated with the credit rating upgrade.