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S&P praise for Portugal

May 9, 2014

Ratings agency Standard & Poor's has lauded Portugal for sticking to austerity measures, that it agreed to implement in return for its international bailout. S&P has raised the eurozone nation's outlook to "stable."

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S&P logo on a facade
Image: picture-alliance/dpa

Standard & Poor's eased the pressure on Lisbon Friday by announcing it had changed Portugal's outlook from negative to stable, the less dramatic level of its junk-status category.

Keeping the country's rating at "BB", the agency said that despite all the progress made in recent months it would be an uphill battle for the southern eurozone member to regain investment-grade status.

S&P welcomed Portugal's recent return to capital markets following a three-year abstention at the height of the debt crisis in the 18-member, single-currency area.

Jobs boost required

It also said it expected Portugal to log 1.4-percent growth this year, beating the government's own forecast of 1.2 percent.

But public debt accounting for almost 130 percent of total output and high joblessness remained major points of concern for the ratings agency.

"Over the medium to long term, we think that the low employment rate - coupled with an unfavorable demographic profile - will likely restrain the economy's longer-term growth potential," S&P said in a statement.

The agency's assessment came days after Portugal had announced it would be able to exit its bailout program without a standby loan in mid-May.

hg / bf (dpa, Reuters)