S&P Global Ratings on Friday upgraded Greece's debt to grade BB with a positive outlook as it predicted its economy would rebound over the next two years after the Covid-19 pandemic caused a contraction in 2020.

The upgrade from Greece's previous BB- grade came as the ratings agency predicted the country would see economic growth of 4.9 percent this year and 5.8 percent in 2022, after contracting 8.2 percent last year amid the pandemic.

"The upgrade reflects our expectation of a rapid improvement in Greece's economic and budgetary performance as the adverse impacts of the COVID-19 pandemic subside. The government's policies should enable progress on budgetary consolidation and structural reform," S&P said.

Athens will also benefit from the Next Generation EU recovery fund aimed at helping countries bounce back from the Covid-19 downturn, which S&P said would "result in an improved economic performance."

The ratings agency expects the country to grow faster than the eurozone average over the next three years, though the hard-hit tourism industry won't return to its level seen in 2019 until 2024, at the earliest.

The ratings agency said its positive outlook means it could upgrade Greece's debt in 12 to 18 months if its economic rebound is faster than projected.

However, S&P could revise the outlook to stable if the economy weakens or for any "large and negative deviations from our current budgetary projections."

S&P had last raised Greece's rating by one notch in October 2019.

Most recently, ratings agency Moody's increased its rating for Greece's debt to Ba3 last November, after Fitch in July upgraded it to BB.

Greece in 2010 was hit by the largest economic crisis in its contemporary history, losing more than a quarter of its GDP.

The rating change applies to Greece's long-term debt, while S&P maintained its rating for the country's short-term debt at B.

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