Key Factors Supporting Spain's Rating: Spain's credit rating is based on several positive factors, including its large and valuable economy, strong institutions due to its membership in the eurozone, and governance indicators that are in line with other countries rated 'A'. Additionally, Spain has managed to maintain current account surpluses despite challenges from external factors. However, there are also some challenges to consider. Spain still faces high levels of public debt, and its economy is constrained by persistently high unemployment and low labor productivity, which limit its potential for growth.
Improved Version: Decreasing Deficit Driven by Increased Revenues: Spain's fiscal deficit has narrowed to 4.8% of GDP in 2022, down from 6.8% in 2021, thanks to higher-than-expected tax receipts fueled by strong economic activity. Despite the need for exceptional measures to mitigate the impact of energy and cost-of-living shocks, amounting to 1.7% of GDP, the deficit reduction has been achieved. These measures will continue until the end of 2023, but with lower energy costs and adjustments in targeted fuel subsidies, Fitch predicts a reduced net budget impact of -0.7% of GDP.
To manage costs, the government plans to implement temporary measures, such as windfall gains from the energy and banking sector, as well as a wealth tax, to boost revenue growth beyond the rate of nominal GDP. Fitch forecasts budget deficits of 4.1% in 2023 and 3.4% in 2024, slightly exceeding the government's targets by 0.2 and 0.4 percentage points, respectively.
More information here.
https://www.fitchratings.com/research/sovereigns/fitch-affirms-spain-at-a-outlook-stable-26-05-2023
Improved Version: Decreasing Deficit Driven by Increased Revenues: Spain's fiscal deficit has narrowed to 4.8% of GDP in 2022, down from 6.8% in 2021, thanks to higher-than-expected tax receipts fueled by strong economic activity. Despite the need for exceptional measures to mitigate the impact of energy and cost-of-living shocks, amounting to 1.7% of GDP, the deficit reduction has been achieved. These measures will continue until the end of 2023, but with lower energy costs and adjustments in targeted fuel subsidies, Fitch predicts a reduced net budget impact of -0.7% of GDP.
To manage costs, the government plans to implement temporary measures, such as windfall gains from the energy and banking sector, as well as a wealth tax, to boost revenue growth beyond the rate of nominal GDP. Fitch forecasts budget deficits of 4.1% in 2023 and 3.4% in 2024, slightly exceeding the government's targets by 0.2 and 0.4 percentage points, respectively.
More information here.
https://www.fitchratings.com/research/sovereigns/fitch-affirms-spain-at-a-outlook-stable-26-05-2023