The credit rating agency Scope has maintained Spain’s rating at A-, confirming its position two steps below triple A, the highest grade. In addition, the German company, which carries out investment risk analysis in different countries, has revised its outlook for Spain from stable to positive.
Jakob Suwalski, The Firm’s Sovereign Debt Analyst, Has Underlined The Resilience Of The Spanish Economy, As Well As The Strengthening Of The Country’s Cubicicas And The Consequent Reduction Of The Public Deficit, As The Two Main Reasons For The Decision To Review the perspective.
Still, Suwalski highlights several weaknesses in the national economy, including the country’s high public debt. The high level of unemployment and structural budget pressure related to aging and pensions would be other factors that could pose problems.
Improvements in competitiveness and income
Despite an uncertain environment, Scope highlights the “robust” growth of the Spanish economy, better than that of its counterparts, the positive dynamics of the labor market, the implementation of the EU’s Next Generation funds and the increase in investment spending. Furthermore, it notes that fundamental improvements in Spain’s external competitiveness and sustained private sector deleveraging support long-term stability.
The strengthening of fiscal indicators is supported by the sustained growth of income, thanks to the increase in Social Security contributions, and the moderation of expenses, which will be reflected in improvements in the primary balance (income minus expenses excluding the burden ). of debt interest).
Scope expects continuity in the 2024 budget framework and advances that this year’s fiscal improvement is facilitated by the gradual elimination of temporary measures to address the energy crisis, which translates into a saving of 0.8 points of the GDP.
On the contrary, it focuses on low productivity growth, increasing structural budget pressure and high public debt. Spain’s relatively low productivity and per capita income, coupled with still high structural unemployment, underscore the need for structural reforms to support sustained economic growth, he says.
Despite strong growth in recent years, productivity growth has lagged behind its counterparts. Labor productivity is around 82% of the euro area average in 2022. Furthermore, Spain’s GDP per capita remains 25% lower than the euro area average, limiting its potential. growth, estimated at 1.75%.
Scope was accepted last February by the European Central Bank (ECB) as the fifth risk rating agency (with Fitch, Moody’s, S&P and DBRS), to have a broader vision to help in making decisions on monetary policy. .
