The Economic Rating Upgrade of The Country of Portugal – from Stable to Positive
The rating has been affirmed and the outlook of the country of Portugal has been revised from stable to positive, according to the Moody’s statement they have given last Friday. This New York-based credit rating agency has raised the rating of the country of Portugal to Baa3 in the month of October as it restored the country of Portugal to investment grade.
Moody’s stated that the primary driver of this positive outlook has been the continual improvement of the fiscal performance of the country, which is now expected to improve Portugal;’s key debt metrics at a faster pace than it was anticipated only a year ago.
While the budget deficit of the country of Portugal has narrowed and the borrowing costs have plunged since the Euro crisis, the debt burden of the country of Portugal as a percentage of the gross domestic product remains still the third-highest in the Euro zone behind Greece and Italy. The national government of the country of Portugal aims to narrow the budget deficit even further – to zero point two per cent – of the GDP this year, and sees the debt ratio falling to one hundred and eighteen point six per cent.
Moody’s has also stated that the affirmation of the Baa3 rating for the country of Portugal has also been driven by the macroeconomic fundamentals that have helped balance the relative wealth and diversification of the country’s economy against its modern prospects for growth and the structural economic constraints.
The Factors in Favour of Growth
The tourism industry has boosted the economy of the country of Portugal significantly, as it had expanded for the fifth consecutive year in 2018. This has helped the country’s minority socialist government, which anticipates a general election in the upcoming month of October, to lower the unemployment rate in the country and manage the budget deficit even more efficiently.
The national Bank of Portugal has forecast that the growth will slow down to one point seven per cent this year. The ten year bond yield of the country of Portugal was at about zero point three per cent on Friday. It had peaked at eighteen per cent in the year 2012 at the height of the Euro-zone region’s debt crisis.