“ARC’s growing concerns about the slow growth of the Portuguese economy is one of the factors that explains the change of outlook. The rating also reflects concerns about the quality of the growth of the Portuguese economy, which is very focused on private spending, instead of investment”, said ARC Ratings in a statement issued earlier in the week.
The agency also said restructuring of the banking sector was “slow and costing more than expected” and that Portuguese sovereign debt was exposed to a number of risks.
ARC’s other concerns include uncertainty about “Brexit” and difficulties Portuguese companies face in export markets.
ARC is due to review its rating on Portugal on 3 March, 2017.
ARC was previously known as Companhia Portuguesa de Rating. Its shareholders are ratings agencies in India (Care Ratings), Malaysia (MARC), Brazil (SR Ratings), Portugal (Sociedade de Avaliação Estratégica e Risco) and the United Kingdom (Enigma Investment Holdings Limited).