Portugal: Fitch hints at upgrade

Page created: Wednesday, 5 July 2017 9:26 GMT

Fitch   Gross Domestic Product

Lisbon, Jul. 4 (Lusa) – Rating agency Fitch is alert to the high government debt, weaknesses in the banking system and unemployment, saying that these factors keep Portugal out of the “investment quality” group of countries.

On 16 June, Fitch upgraded its outlook for Portuguese government debt from stable to positive, but kept the ‘BB+’ (junk) rating. This means that at its next revision, the agency could upgrade its rating to ‘BBB’, the first level above junk.

Fitch said that Portugal’s main weaknesses were its high government debt, 130.4% of Gross Domestic Product (GDP) at the end of last year, “much higher that most ‘BB’ rated counties, and also most euro zone countries where government debt is about 90% of GDP.

Unemployment is also well above the median for BB rated countries, even though it has fallen significantly since 2013, driven by a rise in service industry jobs.

On the other hand, Fitch said that some of the strengths included the human factor development, governance indicators and per capita earnings.