Fitch ups Greece's rating to a notch below investment grade

Fireworks explode over the ancient Parthenon temple at the Acropolis hill during New Year celebrations in Athens, Greece, Sunday, Jan. 1, 2023. Credit ratings agency Fitch has raised Greece’s credit rating to one notch below investment grade. In a report issued Friday, Jan. 27, 2023, Fitch estimates that Greece’s deficit will shrink to 1.8% of its gross domestic product in 2024 from an estimated 3.8% last year. (AP Photo/Yorgos Karahalis, File)

NEW YORK (AP) — Credit ratings company Fitch has raised Greece’s credit rating to one notch below investment grade.

In a report issued Friday, Fitch estimates that Greece's deficit will shrink to 1.8% of its gross domestic product in 2024 from an estimated 3.8% last year.

“There is some uncertainty around fiscal policies after the upcoming legislative elections but the risks are mitigated by a broad commitment to and a recent track record of fiscal prudence,” Fitch said. Greece's outlook is stable, Fitch said in raising its rating on the country's debt to BB+ from BB.

Greek banks are another big reason for the upgrade, Fitch said, noting their “important progress in reducing non-performing loans.”

Fitch forecasts Greece's GDP growth to reach 0.9% in 2023 and 2.3% in 2024.

Inflation is forecast to ease from 9.3% in 2022 to 5% this year, Fitch said, and only 1.5% in 2024, thanks to the easing of energy and other commodity prices, and other factors.

Greece had once hoped 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.