The agency said the Greek economy was supported by per-capita income and governance indicators above the average for BBB-rated countries, as well as by a credible economic policy framework underpinned by membership of the European Union and the eurozone.
Positive factors include strong fiscal performance, prudent economic policy and resilient growth, which have strengthened the economy’s fundamentals and accelerated the decline in public debt.
However, Fitch stressed that weaknesses linked to the debt crisis remained, most notably public debt that was exceptionally high despite falling rapidly, persistent external imbalances and structural constraints on growth.
Rapid decline in public debt
Very high public debt remains a key constraint on Greece’s credit rating. However, its rapid reduction is strengthening debt sustainability and supporting the BBB rating.
According to the agency’s forecasts, public debt stood at 146.1% of GDP in 2025 and is expected to fall further, to 124.6% of GDP in 2028.
This decline will be supported by high primary surpluses, strong nominal GDP growth, a favourable differential between interest rates and economic growth, and active debt management, including early loan repayments.
Although Greek debt will remain significantly above the average for BBB-rated countries, at 56.9% of GDP, Fitch expects Greece no longer to have the highest debt-to-GDP ratio in the eurozone by the end of 2026, as it falls below Italy’s.
Limited funding risks
The rating agency considers that the structure of Greek debt and its low servicing cost limit the risks arising from its high level.
In particular, it points to the long average repayment term of 19 years, the high share of loans on favourable terms and at fixed rates, and the substantial cash buffer, which is forecast to stand at about 12% of GDP in 2026.
The implied interest rate on total public debt remains low, at about 1.5%, below expected nominal GDP growth, estimated at close to 4%.
This reflects the relatively limited pass-through of changes in market interest rates to debt-servicing costs, as well as the hedging of interest-rate risk on some official lending.
These features limit refinancing risk, support market access and provide protection against volatility in financial conditions.
Strong fiscal surpluses
Greece’s particularly strong fiscal performance compared with other countries in the same rating category is an important support for its rating.
Fitch forecasts that the general government balance will show a surplus of 0.6% of GDP in 2026, against an average deficit of 3.1% forecast for BBB-rated countries. The primary surplus is estimated at 3.6% of GDP.
These forecasts already incorporate permanent measures announced at the Thessaloniki International Fair, totalling about 0.8% of GDP, mainly comprising tax cuts and targeted spending, as well as temporary energy support and higher defence spending.
The agency noted that tax revenues, social security contributions and improved tax compliance were supporting revenue growth, which continued to outpace spending growth.
Prudent fiscal policy and institutional safeguards
Greece’s commitment to sound public finances has become a more established strength for its credit rating, according to Fitch.
Fiscal performance since the pandemic demonstrates a strong track record of prudent management, supported by broad political and public acceptance of fiscal discipline.
Institutional safeguards, including the domestic fiscal rule introduced in 2025 requiring a primary surplus, as well as the European fiscal framework, also bolster the credibility of economic policy.
Fitch considers that these factors will ensure any easing of fiscal policy remains controlled. For the 2027 budget in particular, it views the looser fiscal stance as a scaling back of the outperformance of previous years, rather than a sign of weakening fiscal discipline.
Growth of 2% in 2026-2028
The Greek economy has proved resilient despite a weaker international environment and increased uncertainty.
Fitch forecasts average growth of 2% in 2026-2028, allowing Greece to continue to outperform the eurozone.
Domestic demand, particularly investment and private consumption, will be the main drivers of growth.
Projects linked to the Recovery Fund, public investment and additional European funding are expected to continue supporting fixed capital formation and the medium-term growth outlook.
However, the agency identifies downside risks, mainly stemming from the international environment and challenges in delivering investment, given the significant role it plays in its forecasts.
Structural weaknesses remain
Despite the improved growth outlook, Fitch notes that the Greek economy continues to face structural constraints.
Higher investment is helping to rebuild the productive capital stock after a prolonged period of underinvestment and supporting convergence with European economies.
However, the economy continues to bear significant effects of the debt crisis. Real GDP remains well below its pre-crisis peak, while per-capita GDP is still low compared with the European Union average.
The labour market has improved markedly, with unemployment continuing to fall. However, skills shortages and other structural barriers continue to constrain the economy’s productive capacity.
External deficit remains a weak point
Fitch also counts Greece’s external position among the economy’s significant weaknesses.
The agency forecasts that the current account deficit will stand at 6.5% of GDP in 2026, with a gradual reduction expected in the years ahead.
Large external deficits reflect structurally low domestic saving, while investment with a high import content is expected to continue to put pressure on the external balance.
Strong tourism receipts, European funding and foreign direct investment help finance the deficit, but are not expected to materially improve the relevant indicators.
In addition, high energy dependence leaves Greece vulnerable to imported price rises, contributing to inflation above the eurozone average in 2026.
Greek banks are stronger
Fitch’s assessment of the Greek banking system is positive, with the agency judging that the risks it could pose to the state budget remain limited.
The sector is now significantly stronger and more resilient than in the past, while banks’ profitability, liquidity and capital adequacy remain at satisfactory levels.
Asset quality has deteriorated only slightly, owing to the restructuring of older retail banking exposures, while banks continue to have a strong funding base and access to markets.
Meanwhile, macroprudential measures and borrower-based restrictions are helping to limit the build-up of systemic risks.
However, some structural vulnerabilities remain, including significant reliance on deferred tax credits (DTCs), as well as exposure to external shocks and possible market repricing.
Governance indicators
On governance, Fitch places Greece in the 63.2nd percentile of the WBGI (Worldwide Governance Indicators).
This performance reflects a recent record of smooth political transitions, a moderate degree of voice and accountability, moderate institutional capacity, an established rule of law and a moderate level of corruption.