Standard & Poor’s raises Portugal’s outlook

The ratings agency Standard & Poor’s (S&P) has reviewed Portugal’s outlook from “stable” to “positive”.

It now joins the other ratings agencies which have raised Portugal’s outlook in recent weeks and reflects the confidence and credibility investors can have in the policies being pursued by the current PS socialist government led by António Costa.
S&P highlights the resilience of the Portuguese economy and improvements in its budget consolidation and costs associated with servicing its external debts.
The report mentions Portugal’s positive structural consolidation of its public accounts and ability to retain gains in competitiveness which have been reflected in a increase in exports and a drive to position Portuguese companies towards an export-driven economy.
At the same time, S&P reports a gradual reduction in private debt and a growth in investment and the economy at rates which are above the European Union average.
S&P highlights the progressive change in the composition of external debt, with greater recourse to capital instruments (i.e., Direct Foreign Investment) and less reliance on debt instruments (i.e., sovereign bonds), an aspect that encourages investment benefitting from competitiveness and sustained economic growth.
Concerning public accounts, the agency emphasises a primary surplus of around 3% achieved in 2018, one of the highest in the eurozone which is expected to be maintained in the period 2019-2022, reinforcing the downwards trend of Portugal’s public debt ratio.
The improvement in the rating of Portugal’s public debt has benefitted the conditions of State financing, families and companies. The interest rate on 10-year Portuguese bonds is today below 0.3% and the differential compared with economies that have a better rating is closing, with Portugal’s interest rates in line with those of Spanish sovereign debt.