Standard & Poor’s believes Spain’s weak economic growth prospects could undermine the government’s fiscal consolidation program.
In a bulletin released today, S&P said that, in its view, “Spain’s general government deficit is likely to remain above 5% of GDP through to 2013 versus the official forecast of 3% of GDP by 2013. As a result, we expect the general government debt burden to rise above 80% of GDP by 2012. We also expect much weaker economic performance than current budgetary assumptions. There is, moreover, significant implementation risk with regard to the government’s fiscal consolidation plans, which are not yet fully specified.”
The negative outlook on the sovereign ratings, which we assigned on Dec. 9, 2009, remains in place in the absence of more aggressive and tangible actions by the authorities to tackle Spain’s economic and fiscal imbalances. Any deterioration over and above our current expectations could put further downward pressure on the ratings.
See Spain: Country Economic Forecast from Oxford Economics, available for complimentary download via the Alacra Store.