In its statement, credit rating agency S&P Global decided to keep Spain’s rating at A/A-1 with a stable outlook, despite the political uncertainty, this Friday.
“Despite political uncertainty, the competitive Spanish economy remains services should post higher growth rates The agenda states that the Eurozone average will be reached in 2023 and 2024.
According to S&P, the approval of Spain’s rating reflects the resilience of the Spanish economy in the face of a series of disturbances. According to the rating agency, strong tax collections and good labor market results in the context of reducing private sector external debts support Spain’s solvency.
S&P therefore forecasts the Spanish economy to grow faster than the Eurozone average, given the resilience of the labor market and despite forecasts for oil and gas prices to rise slightly in the remainder of 2023 and 2024.
All this happened despite the uncertain political scenario after the July 23 elections. In this sense, the body noted that any coalition agreement to form a minority government would likely involve “complex political compromises that could leave the next government vulnerable to the demands of several small parliamentary groups.” If negotiations fail, national elections in Spain will be repeated early next year.
“So far, political paralysis has had minimal impact on the Spanish economy,” the rating agency said. S&P predicts growth in the Spanish economy for 2023 1.6% for next year It forecasts a slight slowdown before growth of 2.3% in 2025, supported by further application of EU Recovery and Resilience Facility funds.
debt development
At the same time, the gross debt of Spanish Public Administrations is expected to be around 108% of GDP in 2023, i.e. 12 percentage points above pre-pandemic levels, with a large portion held by non-residents. .
“Rhythm The future of debt reduction depends on more consolidation budget, economic growth prospects in Spain and the absence of new disturbances,” the note states.
Even so, gradual budget consolidation is expected between 2023 and 2026; However, the institution warned that indexing pension expenditures to inflation would continue to put pressure on budget results and prevent the reduction of debts of Public Administrations.
The stable outlook reflects balanced risks to Spain’s solvency, given high public debt, weakening demand in key European trading partners and political uncertainty.