Portugal's Sovereign Credit Rating Upgraded to A+ by Standard & Poor's

Strategic Insights -

Standard & Poor's (S&P) has upgraded Portugal's sovereign credit rating to A+ with a stable outlook, citing the country's ability to implement policies in a relatively smooth manner and maintain fiscal discipline, despite a fragmented parliament. This decision follows the agency's previous rating upgrade from A- to A with a positive outlook in February. The upgrade is expected to pave the way for further improvements, but the agency also noted potential risks, including tighter immigration policies that could weigh on labor supply. Portugal's government has welcomed the upgrade, expressing confidence in its fiscal and economic performance and commitment to structural reforms and economic growth.

Key Takeaways:

  • Standard & Poor's has upgraded Portugal's sovereign credit rating to A+ with a stable outlook, citing the country's ability to implement policies smoothly and maintain fiscal discipline.
  • The upgrade follows the agency's previous rating upgrade from A- to A with a positive outlook in February.
  • S&P expects public debt to decline from 84.6% of GDP in 2025 to 84% by 2028, albeit at a slower pace.
  • The agency forecasts a small budget surplus of 0.2% of GDP in 2025 but projects a return to deficits in 2026 due to increased social and defense expenditures.
  • Portugal's GDP growth is expected to slow to 1.7% in 2025 but rebound to 2.2% in 2026, supported by investments linked to the EU's Recovery and Resilience Plan.
  • The government has reaffirmed its commitment to structural reforms and economic growth, while maintaining fiscal responsibility and reducing debt.

Statistics:

  • Public debt: 84.6% of GDP in 2025, expected to decline to 84% by 2028 (S&P)
  • Budget surplus: 0.2% of GDP in 2025, projected to return to deficits in 2026 (S&P)
  • GDP growth: 1.7% in 2025, 2.2% in 2026 (S&P)
  • Exports to the US: around 7% of total goods exports (S&P)
  • Investment linked to the EU's Recovery and Resilience Plan: expected to support GDP growth in 2026 (S&P)

Sources:

  • Xinhua via COMTEX: "Standard & Poor's upgrades Portugal's sovereign credit rating to A+ with a stable outlook"
  • S&P press release: not explicitly stated in the original text, but mentioned as the source of the upgrade.