Fitch ratings has affirmed Spain sovereign debt at BBB with negative outlook. The agency forecasts that Spain's economy will begin to recover in 2014 "as headwinds from fiscal austerity and financing conditions ease," says the statement. "As is currently the case, the recovery will be primarily driven by net exports; domestic demand will remain subdued for a longer period. The agency maintains its assumption that medium term potential growth is 1.5%."
Fitch projects that "public debt will peak in 2014-15 at around 96% and decline gradually thereafter, assuming an effective interest rate close to current levels." Regarding the medium-term deficit forecasts, Fitch assumes "some slippage relative to official targets."
Fitch also assumes that current government will fulfill its term, and "early parliamentary elections will not be called before 2015." Fitch expects "that the current administration will broadly maintain its current policy stance; that there will be no constitutional crisis in Spain; and that future governments will keep public debt/GDP on a gently declining path in latter half of the decade."
Spain's government is under pressure from public opinion as a secret payments plot has been discovered from former Partido Popular accountant. PM Mariano Rajoy and his team are involved in the payments.
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