Normalising global economic fundamentals partially offset rising fiscal pressures and geopolitical uncertainty in 2025, ensuring a balanced overall sovereign credit outlook, says Scope Ratings.

The Positive Outlook on Greece’s BBB- ratings is underscored by falling public debt, a more resilient banking system, and structural reforms to tackle economic vulnerabilities. Our baseline is for primary budget surpluses to be sustained in coming years.

Further upside for Greece’s credit rating hinges on robust nominal economic growth, deeper fiscal consolidation, more reform of the country’s banking system and structural economic reform compensating for years of public and private under-investment.

Climate and demographic risks have an important if moderate impact on medium-term public debt trajectories for most EU countries but become increasingly credit relevant and mutually reinforcing in the long run, says Scope Ratings.

Multibillion euros worth in annual damage from wildfires such as those in Greece and other parts of Europe this summer could become much less unusual in the decades ahead due to climate change as forecasted by the Intergovernmental Panel on Climate Change

Scope senior writer Keith Mullin interviews Dennis Shen, lead analyst for Greece, after the upgrade of Greece to an investment-grade (IG) rating of BBB-, concerning Greece’s institutional environment, reforms, and challenges for the ratings moving ahead.

The policy continuity stemming from an expected re-election of New Democracy and a longer-run continuation of recent progress would support Greece’s creditworthiness.

The upgrade of Greece’s Outlook from Stable to Positive implies at least a one-in-three probability of an investment-grade rating within 18 months. How will challenging macroeconomic and monetary conditions play into the country’s prospects?

EU countries need to ramp up green investments to achieve their climate objectives, which poses fiscal risks amid a weakened economic outlook and rising interest rates, though the long-term gains of forceful climate action outweigh short-term costs.

More credible and enforceable fiscal rules should help bolster long-term debt sustainability in the euro area while the return of market discipline is already incentivising consolidation and underscores the importance of fiscal prudence.