What does “Investment Grade” Mean?
Having an investment grade rating means that institutional investors, many of whom invest from overseas, have the possibility to invest in securities (think bonds, stocks, etc). Big pension funds and insurers can start investing in the Greek economy as they did before the crisis.
For Greece, this means cheaper and more stable funding sources for the future. Not only the government, but also local lenders in Greece, would also have better borrowing costs.
Only 70 countries are classified by S&P as “investment grade."
Declining Debt:
At the same time, Greece has been able to reduce its debt from 206% of GDP at pre-pandemic levels to 171% today.
The chief exec. of Eurobank, Fokion Karavias, says that if Greece was granted investment-grade status, this would be “the greatest turnaround in the European financial system”.
Is This Happening in the Rest of Europe?
Compared to other European nations, Greece’s rebound is more prominent. GDP grew 8.4 percent in 2021 and 5.9 percent in 2022.
At Goldman Sachs, a major international investment bank, economists are saying that Greece will outperform other European bloc countries in the next 2 years.
What Caused this Surge?
Exports:
Dimitris Malliaropulos, chief economist of the Greek central bank, calls exports the country’s “biggest success story.” Between 2010 and 2021, exports of goods grew 90 percent, while the euro area as a whole only grew 42 percent.
Market Insights
.webp)
