Over the weekend, S&P Global Ratings upgraded Greece’s sovereign credit rating to Positive. Simultaneously, S&P decided to keep Italy’s rating at Stable, showing a divergent path for the two economies.

Greek structural reforms, an increase in foreign investment, and stronger fiscal baselines led to the credit improvement. After continued economic struggles, Greece is predicted to be one of Europe’s fastest-growing economies. Eurostat data shows that in 2022, Greece returned to a budget surplus of 0.1% of GDP after two years of running a deficit. Even with this improvement in outlook, the Greek investment grade remained at “BB+/B”.

The Greek economy has benefitted from a return to normal after COVID-19 wreaked havoc on the tourism industry. In 2022, the Greek tourism industry rebounded to 97% of pre-pandemic levels. This increase, combined with a reduction in sovereign debt burden and an improved tax system, has led to rapid economic growth.

S&P said, “Following the fastest fiscal adjustment in the EU in 2022, Greece’s primary balance has returned to surplus and we expect further fiscal improvements in coming years.”

Investments went up to 21% of GDP at the end of 2022 – up 9% over the past three years, it was added, as “we expect this trend to continue, anchored in the 30.5 billion euros of Recovery & Resilience Fund resources available for Greece. Thus, we have revised the outlook for Greece to positive from stable, confirming the BB+/B rating.”

Greece’s economy “has turned a page,” said Greek Finance Minister Christos Staikouras, welcoming the upgrade of Greece’s economic outlook, and adding that S&P “becomes the second international rating agency in 2023 to place the country half a notch before the investment grade.”