Body considers that this qualification represents an "important step" for the Spanish economy
MADRID, 16 Mar. (EUROPA PRESS) -
The credit rating agency Moody's has confirmed Spain's rating at 'Baa1' and has improved the outlook from 'stable' to 'positive' due to "better balance in the country's growth model."
The agency explains that the Spanish economy has low private sector leverage and a "robust" banking sector, as well as a current account surplus and a strengthened labor market compared to the last decade due to "solid governance" and "a "increased policy effectiveness" to address the sources of macroeconomic imbalances.
Moody's believes that these circumstances could lead to greater growth and less volatility than is currently seen.
The Minister of Economy, Commerce and Business, Carlos Body, has highlighted in a message through his X account that the fact that the rating agencies show their confidence in the growth model of the Spanish economy "is an important step ".
Moody's highlights some of the measures adopted by the Government, such as pension reform and labor reform, which translate "into improvements in all areas" and have made it possible to reach historic highs in Social Security affiliation.
With this basis, the agency predicts that Spain will register real Gross Domestic Product (GDP) growth of 1.7% and 1.8% in 2025.
Regarding investment, Moody's expects that both public and private spending will be supported by the European Union investment funds that Spain has available for the coming years.
The total endowment of Spain's Recovery and Resilience Fund (FRR) will reach around 163 billion euros, which represents 11% of GDP in 2023, distributed approximately equally between grants and loans. This amount is added to the 52.6 billion euros available to Spain within the framework of the EU's ordinary budget cycle from 2021 to 2027.
Furthermore, Moody's confirmation of the 'Baa1' rating reflects Spain's "economic strength" and the "solidity" of its institutions, which are "significantly superior" to those of its rating peers.
However, according to the agency, these positive characteristics are offset by the higher debt burden compared to peer countries, as well as the weakening of debt affordability and the structural challenges it faces, such as the aging of the population. Likewise, it highlights that Spain's moderate exposure to geopolitical and internal political risks constitutes another credit challenge.
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