Sovereign Credit Ratings in 2024: Year in Review

DBRS Morningstar released a Sovereign Credit Rating Review for 2024, covering credit rating actions taken between January 1 and December 17, 2024. The review is in the form of a digest for easy navigation, and includes a brief summary of regional developments. For each sovereign government rated by DBRS Morningstar, the digest shows the credit rating trajectory during 2024, the last credit rating action, the last change to the credit rating/trend, and our current credit rating drivers. Also, it includes a select list of research commentaries produced by the Global Sovereign Ratings Group.

Global economic conditions have remained broadly favorable during 2024 despite the continuing wars in Europe and the Middle East. The International Monetary Fund (IMF) estimates that global growth has slowed marginally from 3.3% in 2023 to 3.2% in 2024. Inflationary pressures eased further over the course of the year and major central banks in the Americas and Europe have begun to reduce policy interest rates as a result. While inflation has helped debt dynamics, with long term real interest rates above pre-pandemic levels, global public debt remained high in 2024 with the IMF projecting it to exceed USD 100 trillion (93% of global GDP).

A few credit rating actions worthy of note:

-- The continued buoyancy in growth coupled with the continued improvements in the public sector balance sheet and in repayment capacity resulted in upgrades in three of our rated sovereigns - Ireland, Spain, and Argentina. As of December 17, Positive trends remain on six of our sovereigns - Cyprus, Greece, Italy, Portugal, Slovenia, and India. The only credit rating in our coverage that has seen downward pressure resulting in a Negative trend is Slovakia.

-- In Europe, seven countries saw upward rating pressures. The positive momentum in these countries were driven by strong economic growth and improving debt metrics. Investments backed by EU resources, such as the Next General EU and cohesion funds, were key in supporting growth in several southern European countries. In Greece, the credit rating was also supported by improvements in the banking system, which saw greater profitability, reduced non-performing loans, and receding risks from contingent liabilities. On the other hand, Slovakia's trend was changed to Negative due to the country's structurally large fiscal deficit and the uncertainty surrounding the new government coalition's commitment to fiscal sustainability.

-- In South America, Argentina was upgraded by two notches to B (low), Stable due to the country's improving macroeconomic outlook and repayment capacity. The large fiscal adjustment under the Milei administration this year has improved the outlook for public finances and helped to restore price stability, with current monthly inflation significantly lower than at the start of the year.

-- In Asia, India's credit rating was placed on a Positive trend and confirmed at BBB (low). The trend change reflects the expectation of solid economic growth and fiscal consolidation in the medium term due to India's progress on structural reform.