We forecast that the Spanish economy will recover to 2019 levels in 2022, as authorities phase out social distancing requirements and global travel and trade volumes rebound. Benefiting the recovery, Spain is eligible for 12.8% of GDP in loans and transfers from the EU's Recovery and Resilience Fund, 2.7% of GDP of which the government is set to spend under the 2021 budgetary plan. We project consolidation of Spain's budgetary deficit to 4.2% of GDP in 2022 from an estimated 11.8% last year, as recovering demand benefits revenue and extraordinary economic support is phased out. Risks to Spain's fiscal and growth paths remain. We affirmed our 'A/A-1' unsolicited long- and short-term sovereign credit ratings on Spain. The outlook remains negative.
