Spain was upgraded by houses Moody’s Ratings and Fitch Ratings, a double success that recognizes the excellent growth of the country’s economy in the eurozone.
Both houses uploaded their ratings to a degree, to A3 Moody’s and a Fitch, bringing them to the highest level since 2012.
“Spain’s economic power is improving thanks to a more balanced economic growth model, labor market improvements, and boosting the banking sector, which increase the resilience of the economy,” Moody’s said in a statement on Friday.
Fitch shared this view, stressing that “the country’s economic return exceeded expectations and significantly exceeded other major eurozone economies.”
The upgrades, followed by the one that took place two weeks ago by S&P Global Ratings, extend the restoration of a country whose credit profile reached the lowest point, just one step above the level of “rubbish”, according to key evaluators, during the darkest phase of the Eurozone.
Now the situation has been reversed, as Spain, along with other key protagonists of the turmoil in southern Europe, from Greece to Italy, are on a steady upward trend. In the meantime, France’s political instability and fiscal problems have turned the country into the focus of market speculation.
The irony with Spain is that parliamentary impasse is more of an example of malfunction at this stage. From the unclear elections of 2023, the government of Prime Minister Pedro Sanchez is struggling to promote basic legislation.
The budget for 2025 has not been able to garner enough votes and it is not certain that it will be able to gather enough support to parliament to pass another.
Fitch focused on Spain’s “political stalemate”, stressing that “the center -left minority government is increasingly difficult to secure the support of Parliament, including to vote on budgets”.
However, political instability does not seem to have prevented the development of Spain. By 2021, the country has overcome Europe’s other major economies, with tourism, low energy prices and household spending supplying its potential.
The gross domestic product is projected to increase by 2.6% this year, more than doubleing the 1.2% forecast for the eurozone. On Friday, the Ine Statistical Service revised up its estimation of growth in the second quarter at 0.8%. This is also evident in bond markets.
The performance difference, or spread, between the Spanish and German 10 -year bonds closed at about 57 key points on Friday. 2022 were over 130 key points.
An remaining weakness for Spain is its huge debt. Public debt amounted to 102.3% of GDP at the end of July, according to the Central Bank. It has been reduced by the Covid-19 pandemic, when the index reached 124.2%.
“The three upgrades of the evaluation in just two weeks show confidence in our growth and good prospects for our economy,” Finance Minister Carlos Cuerpo said, adding: “It will attract many more investors to our bond editions.”