Canadian rating agency DBRS on Friday confirmed Portugal’s BBB (high) rating with a stable outlook, according to a statement.
“The disruption to the Portuguese economy brought on by the global health crisis has been severe,” the statement reads. “The economy contracted by 7.6% in 2020 due to the rapid spread of the Coronavirus Disease (COVID-19) and subsequent mobility restrictions.”
The note adds that the effects of the pandemic on the country reflects “the small and open nature of the economy as well as the contribution to output from tourism.”
However the country should “rebound this year” as the vaccine rollout advances, the agency said, while noting that the “strength of the recovery remains uncertain.”
The agency pointed out that ratings could be upgraded if the authorities manage to return the public debt ratio to a “firm downward trajectory” and the macroeconomic outlook improves. But if the crisis diminishes growth prospects and weakens political commitment to sustainable macroeconomic policies, ratings could be downgraded, according to the agency.
The Canadian agency noted that the European Commission forecasts the Portuguese economy to grow at an annual rate of over 4% in 2021 and again in 2022, and that the government expects 70% of the population to be vaccinated by the end of the summer.