ATHENS, Greece (AP) — Credit ratings company Fitch has revised Greece’s outlook to positive from stable, although it kept the country’s rating at BB, two notches below investment grade.
In a report issued Friday, Fitch estimates that the Greek economy grew 8.3% in 2021, much faster than the 4.3% forecast in its previous rating review last July, although growth still took a hit in the last quarter as a result of the coronavirus pandemic waves fueled by virus variants. Before that, the country’s gross domestic product (GDP) had exceeded pre-pandemic levels.
Greek banks are a big reason for the upgrade, “sharply reducing the level of non-performing loans... and enhancing their ability to provide credit to the real economy.”
Further on the positive side, Fitch expects the economic recovery to extend to 2022 and 2023, with GDP expanding 4.1% in each of these years. Also, the still heavily-indebted country is expected to fully repay one of its creditors, the International Monetary Fund, in 2022.
On the negative side, the deficit is declining very slowly, falling to 9.7% of GDP in 2021 from 10.1% in 2020. Fitch notes that this was “due to the continued pandemic-related support provided by the government to the private sector, amounting to 15.6 billion euros ($17.8 billion or 8.7% of forecast 2021 GDP). But the phasing out of pandemic-related support measures will help lower the deficit to 4.1% in 2022 and 2.9% in 2023.
Fitch expects the current account deficit to remain high as the demand growth that goes along with the recovery will fuel imports and offset export growth and higher income from tourism.
An upgrade in outlook is usually, but not always, followed by a credit upgrade within 12-18 months.
Greece hopes to see its debt upgraded to investment grade by the end of 2022 or early 2023 for the first time since 2010 when the financial crisis caused by excessive deficits and debt hit the country hard, necessitating years of austerity imposed by its creditors.
Fitch notes that “Greece has high income per capita that far exceeds” the median level of countries in the same investment grade and that “governance scores and human development indicators are among the highest of sub-investment grade peers.” Nonetheless, the still very high debt levels and bad bank loans drag the country’s rating down, Fitch says.7 Stocks That Can Withstand a Taper Tantrum
The stock market is stimulated like a child with a sugar high on Halloween night, and investors are enjoying the ride. It seems like nearly every sector continues to point in one direction. But seasoned investors know that the markets don’t move in the same direction all the time. And even long-term bulls admit that a correction may be coming.
One reason for this is that the Federal Reserve (i.e. “The Fed”) is “talking about, talking about” an end to its asset purchase program. If that talk turns into concrete action, then it would be almost a sure sign that interest rates will rise sooner than expected.
That combination is typically negative for equities, such as stocks. Yet, even if the Fed announces an earlier-than-expected tapering plan, there are stocks that will hold up well and even thrive. And that’s the focus of this presentation. We’re taking a looks at seven stocks that stand to benefit from a less accommodative monetary policy.
Financial stocks are one group of stocks that will benefit from rising interest rates. And you should also consider stocks with a high return on equity (ROE).
ROE = Net Income/Shareholders’ Equity
Stocks with a high ROE are reinvesting cash at a high rate of return which can make them an ideal choice when that cash becomes more valuable.
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