In its latest assessment, S&P Global decided to maintain Spain’s rating at A/A-1 with a stable outlook, despite ongoing political uncertainty this week.
The agency notes that even with political gridlock, Spain’s economy remains robust, driven by a strong services sector that could sustain higher growth. The report outlines a trajectory where the Eurozone average is expected to be reached in the coming years, with Spain positioned to outpace the region’s overall pace of expansion thanks to structural strength in its services and a supportive policy environment.
According to S&P, Spain’s rating reflects the economy’s resilience amid a sequence of domestic disturbances. The agency highlights solid tax revenue performance and a resilient labour market as key supports to solvency, alongside a reduction in private sector external debts that bolster Spain’s capacity to meet financial obligations.
Looking ahead, S&P projects that Spain’s economy may grow faster than the Eurozone average, supported by a steady labour market and continued external resilience, even as energy prices face modest increases in the near term.
The assessment comes amid political uncertainty following the July 23 elections. The rating body notes that any coalition agreement for a minority government could involve complex compromises that might leave the new administration vulnerable to pressure from several small parliamentary groups. Should negotiations stall, early national elections could be held in the near future.
So far, political paralysis has had limited impact on Spain’s economy, as per S&P. The agency projects growth for 2023 at about 1.6 percent and anticipates a modest acceleration in the following year, with a return to growth around 2.3 percent in 2025, supported by continued use of EU Recovery and Resilience Facility funds.
debt development
At the same time, Spain’s gross debt for public administrations is expected to hover near 108 percent of GDP in 2023, roughly 12 percentage points above pre-pandemic levels, with a substantial share held by non-residents. The note emphasizes that the path forward depends on continued budget consolidation, favorable growth prospects, and the absence of new disturbances that could disrupt fiscal progress.
Looking ahead to the mid-term, gradual consolidation is projected through 2026. The report also cautions that indexing pension expenditures to inflation will continue to weigh on budget outcomes and could slow the reduction of public debt.
The stable outlook signals balanced risks to solvency, reflecting the heavy debt burden, softer demand from key European trading partners, and ongoing political uncertainty. Taken together, these factors indicate a cautious but steady path for Spain’s credit profile, with policy measures and external conditions playing decisive roles in shaping the debt trajectory and overall economic resilience.