Spain

We forecast that the Spanish economy will recover to 2019 levels in 2022, as 75% of the population is fully vaccinated, accumulated savings are high, and global travel and trade volumes continue to improve rapidly. Spurring growth is Spain's eligibility for 12.8% of GDP in loans and transfers from the EU's Recovery and Resilience Fund (RRF). In order to receive the RRF funds, Spain has committed to a series of reforms to its labor market and pension system. The outcome of those reforms will, in our opinion, affect Spain's long-term creditworthiness. We project that Spain's budgetary deficit narrows to 8.4% of GDP in 2021 and 5.0% of GDP in 2022, from an estimated 11.0% last year. Under current macroeconomic assumptions,

...Institutional and economic profile Flexibility and performance profile Although the Spanish and European policy response to the pandemic should yield higher growth and a re-energized reform agenda, the implementation risks are considerable. + We forecast that the Spanish economy will recover to 2019 levels in 2022, as 75% of the population is fully vaccinated, accumulated savings are high, and global travel and trade volumes continue to improve rapidly. + Spurring growth is Spain's eligibility for 12.8% of GDP in loans and transfers from the EU's Recovery and Resilience Fund (RRF). + In order to receive the RRF funds, Spain has committed to a series of reforms to its labor market and pension system. + The outcome of those reforms will, in our opinion, affect Spain's long-term creditworthiness. Momentum on debt reduction could stall as soon as 2023, in the absence of credible pension reform and budgetary discipline. + We project that Spain's budgetary deficit narrows to 8.4% of GDP in 2021...

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