Μake us preferred on Google Greece remains among a small group of European countries with positive sovereign credit trends, in contrast to France, Belgium and Poland, which face mounting debt pressures and worsening credit prospects, according to a report published Monday by Morningstar DBRS. The credit rating agency identified Greece, Ireland, Portugal and Cyprus as countries whose public finances have improved significantly since the eurozone debt crisis, supporting a continued improvement in their credit ratings. France, Belgium and Poland, meanwhile, have negative credit trends, reflecting rising government debt and political obstacles to reducing budget deficits.
The contrasting outlooks come as DBRS warns that rising public debt, geopolitical conflicts and disruptions to international trade could put pressure on sovereign credit ratings in the coming years, even as the global economy is expected to remain relatively resilient in 2027.
Greece Among Europe’s Positive Credit Trends
Europe stands out as the region where DBRS sees the greatest divergence in sovereign credit prospects. As of Nov. 1, five countries rated by the agency had positive credit trends and three had negative trends. All eight were in Europe, while the remaining 45 countries with publicly available ratings had stable trends. DBRS attributed the improving credit prospects of Greece, Ireland, Portugal and Cyprus to the substantial fiscal adjustments made in the aftermath of the eurozone crisis. Countries hardest hit by that crisis have undertaken some of the most significant efforts to improve their public finances over the past 15 years, helping to explain the continued improvement in their credit ratings, the agency said.
A positive trend indicates the possibility of a future rating upgrade, although it does not guarantee one. Monday’s report is a broader assessment of sovereign credit prospects rather than a new rating decision for Greece.
In France, DBRS sees limited room to raise additional revenue while meeting demands for public spending. The agency also pointed to growing support for parties outside the political mainstream and recent youth-led unrest in European cities as signs of deeper economic pressures, including housing affordability, employment, education and the rising cost of living. Such pressures could make it harder for governments already struggling with budget deficits to reduce spending or raise revenue.
Global Growth Expected to Hold Up in 2027
Despite the fiscal challenges, DBRS expects economic growth to provide a relatively solid foundation for sovereign credit ratings next year. The U.S. economy has continued to outperform other major advanced economies, with gross domestic product expanding at an annualized rate of 3.4% in the third quarter of 2026, exceeding expectations. Growth elsewhere in the Group of Seven has been slower but resilient, despite higher energy prices, U.S. tariffs and weaker hiring.
In Europe, Germany is showing signs of recovery after several years of sluggish growth, while Spain, Portugal and the Netherlands have outperformed the European Union average. France and Italy, by contrast, have recorded weaker growth. Looking ahead, DBRS expects economic activity to accelerate in Europe and Canada in 2027, remain broadly steady in the United States and slow slightly in parts of Asia.
However, geopolitical tensions and trade disputes remain significant risks. Disruptions to oil and natural gas exports from the Middle East could push up transportation and energy costs for businesses and households. The war between Russia and Ukraine, tensions between the United States and China, and changes in U.S. trade policy also pose risks to growth.
Higher Borrowing Costs Put Pressure on Governments
Inflation remains elevated across much of the developed world, complicating efforts by central banks to ease monetary policy. Successive increases in energy prices have made policymakers more cautious about the risk of persistent inflation, while higher long-term interest rates are expected to weigh on economic activity in 2027.
Although borrowing costs adjusted for inflation remain relatively low by historical standards, they are considerably higher than the levels governments became accustomed to after the 2008 financial crisis. That shift matters particularly for countries carrying substantial amounts of public debt. DBRS warned that higher interest rates, combined with continued government borrowing, could make debt more difficult to manage and eventually lead to credit rating downgrades. The risks are greatest for countries with ratings below investment grade, where rising bond yields can sharply restrict access to financing. For countries with stronger credit ratings, the agency sees the pressures as more of a medium- or long-term concern.
Political Pressures Complicate Efforts to Reduce Debt
One of the central concerns in the DBRS outlook is whether governments can bring budget deficits under control while responding to growing demands for public spending. Aging populations are increasing pension and healthcare costs, while demographic changes are reducing labor supply in many economies. At the same time, security concerns and ongoing conflicts are prompting governments to increase defense spending.
DBRS expects several countries with large fiscal deficits to make limited progress in reducing them, particularly where elections or political divisions make spending cuts and tax increases difficult. In the United States, the agency expects little improvement in the structural budget deficit in 2027, despite the country’s continued economic strength. It also warned that political resistance to fiscal adjustments could eventually have consequences for sovereign credit ratings.
Uncertainty Persists in Asia and the Middle East
Outside Europe, DBRS expects most sovereign credit ratings to remain broadly stable, although economic conditions vary considerably. In Asia, Japan is benefiting from stronger wage growth and the normalization of monetary policy, but high public debt and an aging population remain significant challenges. China continues to face weakness in its property market and subdued domestic demand, while India retains favorable medium-term growth prospects.
In the Middle East, the agency sees greater risks stemming from the war involving Iran and disruptions to major shipping routes, including the Strait of Hormuz and the Bab el-Mandeb Strait. Kuwait, Qatar and Bahrain have been more severely affected by the conflict, while the United Arab Emirates, Saudi Arabia and Oman have shown greater resilience. Although oil exports from Gulf producers have increased in recent months, DBRS said a sustained recovery in regional oil and gas exports has yet to materialize.
Source: OT.gr, DBRS
