The agency predicts that Spain’s real GDP will grow by 3.5% in 2022, noting that it expects domestic demand to support the recovery
Moody’s this Friday confirmed its solvency note as a long-term issuer in Spain, with a “Baa1” rating, while keeping the outlook for “stable,” as reported in a statement.
The rating agency has explained as one of the factors that the government support measures have helped “contain the economic impact” of the effects of the pandemic, although it has also cited “high debt levels and the rise in interest costs”. in the country.
For Moody’s, the stable outlook “counterbalances Spain’s efforts to improve its ability to absorb economic shocks and improve the functioning of its labor market”, but warned that “short-term negative risks” also prevail as inflationary pressures mount and “the real economy is slowing in a highly uncertain global environment”.
The agency has pointed out that “the gradual decline” in government debt “will be offset by the weakening of debt affordability measures as the European Central Bank (ECB) tightens its monetary policy.”
Elsewhere, Moody’s expects Spain’s real GDP to grow by 3.5% in 2022, noting that it “expects domestic demand to support the recovery and private consumption to benefit from a rebound in the tourism sector as it slows down.” resume national and international travel.
In addition, Moody’s predicts that average inflation in Spain will reach 8% this year, “driven mainly by energy and food prices”, which “will negatively impact household income and business margins”. For 2023 and 2024, the agency expects real GDP growth in Spain to reach 1.6% and 2.0%, in line with the economy’s potential.
Looking ahead, Moody’s predicts that Spain’s government deficit will reach 5.6% of GDP in 2022, 4.7% of GDP in 2023 and 4.3% of GDP in 2024. “Revenue growth should remain dynamic and benefit in the near term from higher inflation, targeted tax hikes and a shrinking informal economy as the share of card payments increases,” he argued.
Source: La Verdad
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