LISBON: Ratings agency Standard & Poor’s (S&P) said the Portuguese economy will continue to recover, albeit moderately, local media reported.
S&P added that the country’s high debt level and fragile banking system will continue to negatively affect its sovereign rating.
The agency also said in a report on Monday that Portugal has carried out important external adjustments, and has seen an improvement in exports thanks to tourism.
“In our vision, the Portuguese banking sector has to improve its profitability and efficiency, and its ability to generate results continues to be pressured by low interest rate levels and a high volume of problematic assets,” the agency said.
However, the country has seen progress, reflected in the recapitalization of bank Caixa Geral de Deposits, S&P pointed out, and it will improve Portugal’s rating if improvements of the economy exceed expectations.
S&P expects the Portuguese economy to grow 1.6 percent this year after 1.4-percent growth last year, and the unemployment level to be 10 percent. Public debt will be 118 percent of GDP, according to the agency.
The agency kept Portugal’s rating at BB-plus or junk in March, with stable outlook, expressing concerns regarding the risk of banks and high public and private debt levels.
