Modern and relatively diversified economy with stable political system Fiscal flexibility, underpinned by moderate but rising general government debt Membership of the European Economic and Monetary Union (EMU) Unbalanced, labor-intensive growth with low productivity increases High level of private sector indebtedness Economic growth prospects weakened by relative deterioration in export competitiveness The ratings on the Kingdom of Spain reflect its modern and relatively diversified economy, stable political environment, and currently moderate levels of general government debt. Nevertheless, we believe that Spain faces substantial challenges over the medium term in order to improve the economy's flexibility and limit the expected deterioration in the country's public finances. In our opinion, rebalancing the economy toward more productive sectors is likely to be a
