S&P keeps Portugal’s rating at BBB/A-2, revises outlook downwards
Standard & Poor's cuts Portugal's outlook from "positive" to "stable", just like Fitch did a week ago. Rating stays two levels above garbage.
Standard & Poor’s has lowered their outlook on Portugal’s credit rating, from “positive” to “stable”, reveals a note released on Friday. The rating remains at “BBB/A-2”, two levels above the garbage rating.
The downward revision was not expected, as Standard & Poor’s calendar foresaw revisiting the national rating only in September. But it comes a week after Fitch revised the outlook on Portugal’s credit rating from “positive” to “stable”.
“On April 24, 2020, S&P Global Ratings revised the outlook for Portugal from ‘positive’ to ‘stable’,” S&P said in a statement, despite highlighting Portugal’s role in controlling the Pandemic.
“The Portuguese health authorities were successful and fast in stabilising the infection and mortality rates in the face of the Covid-19 Pandemic,” the agency explained, adding that “this year’s severe and synchronised global recession will weigh on Portugal’s small open economy.”
In view of this, Standard & Poor’s is putting forward new forecasts about what will happen in the Portuguese economy in the following two years.
The rating agency says the Portuguese GDP will sink by 7.7% this year, and then recover 4.2% in 2021 and 4% in 2022. S&P also expects that after last year’s surplus, the budget deficit will rise to around 5% of GDP this year. “Faced with this scenario, by the end of 2020, net public debt will grow to around 125% of GDP and then it will shrink again” in 2021.
“Confinement and social distancing constraints will last longer than anticipated, which will cause a very deep decline in activity compared to what was previously expected,” Standard & Poor’s predicts.
