For 2024, the agency expects “the primary surplus to moderate to 2.5% of GDP, compared to 3.4% of GDP in 2023, and Portugal to record a budget surplus of 0.4% of GDP.”
European rating agency SCOPE today maintained Portugal’s rating at A- and revised its outlook upwards, according to a statement from the entity.
“Continued debt reduction, prudent budget policy and improved external position underpin the outlook review,” the organization said, noting that “remaining high public debt and limited growth potential are constraints.”
Therefore, Scope “today maintained the long-term issuer and senior unsecured debt ratings of the Portuguese Republic in local and foreign currency at A-, and revised the outlook to positive, from stable.”
The company also maintained its short-term issuer ratings at S-1 in both local and foreign currency, with a stable outlook, it added.
“The revision of Portugal’s long-term credit rating to positive reflects the country’s continued reduction in debt, a strong track record of prudent fiscal policy with budget surpluses expected for 2024 and 2025, a strong sovereign debt profile and growth prospects to a relatively strong medium term, coupled with continued improvements in the external position,” the report justified.
For 2024, the agency expects “the primary surplus to moderate to 2.5% of GDP, compared to 3.4% of GDP in 2023, and Portugal to record a budget surplus of 0.4% of GDP.”
According to the entity, “in the long term, Portugal’s budget flexibility should gradually decline due to structurally higher social benefits, reflecting increased demand from an aging population” as well as “measures to ease social pressures related to higher housing costs, as well as higher interest expenses, which are expected to rise from 1.9% of GDP in 2022 to 2.4% of GDP in 2025.”
Scope also sees the risks to policy continuity in Portugal as “low,” suggesting that this “stability is supported by a consensus on budgetary prudence among the main political parties.”
The agency estimates that the Portuguese economy will grow by 1.9% in 2024 and accelerate to 2.2% in 2025, expecting “growth to be driven mainly by exports and investments, with significant EU funds providing additional support.”
As for the risks highlighted by Scope, the agency points to the high level of public debt and demographic pressures, due to the aging population and the size of the economy.
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