Moody's raises Portugal's rating

Financial rating agency Moody’s has raised Portugal’s rating from ‘Baa2’ to ‘A3’. 

Moody's raises Portugal's rating

In the rating action report, Moody's states that the two-level increase in the rating attributed to Portuguese sovereign debt reflects the sustained positive effects, in the medium term, "of a series of economic and budgetary reforms, the deleveraging of the private sector" and the continued "strengthening" of the banking sector. 

Moody's emphasises that the medium-term prospects for Portugal are supported by significant public and private investments as well as the implementation of structural reforms, highlighting in both cases the association with the Recovery and Resilience Program (PRR). 

In the information released, Moody's states that economic growth and budgets pointing towards balance indicate that "the debt burden will continue to fall at the fastest rates among advanced economies", albeit from high levels. 

Moody's anticipates that the Portuguese economy will grow by around 2% per year over the next five years, although in the short term it expects a slowdown – pointing to growth of 1.6% in 2024. 

For 2025 it points to growth of 1.9% driven by internal and external demand. 

Regarding the evolution of public debt, the ratio of which the agency expects to continue to fall, it highlights that the expected reduction makes Portugal "an isolated case" among advanced economies, only surpassed by Greece and Ireland. 

The agency also predicts that, unlike what happens in other countries, in Portugal the negative impact of demographic trends on growth will be mitigated by sustained net migration, higher participation rates and an increase in labor productivity growth. 


Related articles: