Fitch maintains the note to Spain given the good prospects for recovery

The risk rating agency Fitch has maintained this Friday the note for Spain at a notable low (A-) with a stable outlook, given the good prospects for recovery and the continuation of favorable financing conditions that will facilitate the gradual correction of the high debt public.

Fitch points out in its report that economic activity has recovered strongly, although at a slower rate than expected, which leaves the growth forecast for 2021 as a whole at 4.6%.

The agency highlights that while the GDP gap is still 6.6 percentage points with respect to 2019, employment is already above the level prior to the pandemic.

Fitch expects the economic recovery to accelerate next year thanks to the greater deployment of European funds and the recovery of international tourism, with an estimated economic growth of 6.3% in 2022.

By 2023, he estimates that GDP growth will moderate to 3.6%, a rate that is still well above the potential growth of the Spanish economy, which stands at 1.4% per year.

The risks to the short-term outlook are mainly related to the evolution of the pandemic and the possibility that new restrictions will be adopted that slow down activity.

Added to this are supply constraints affecting the industrial sector, high energy prices and the possibility that the execution of European funds will be slower than expected.

Budgetary execution estimates point to a public deficit that is substantially lower than expected for this year, which could be 7.5% of GDP, according to Fitch, below the 8.4% forecast by the Government.

The lower deficit will be caused by the good results of the regional administration and by a recovery in collection higher than expected.

For next year Fitch estimates that the deficit will drop to 4.4% of GDP, driven by strong economic growth and the reversal of support measures related to the pandemic.

According to the agency, these projections are consistent with the increase in public debt to 120.4% of GDP in 2021, before falling to 116.2% of GDP in 2022 and 114.2% of GDP in 2023.