Spain Gets First Upgrade in Years


Days after exiting its deep and lengthy recession, Spain also earned itself an outlook upgrade, the first in a long time, by one of the three major U.S. credit rating agencies.

Noting that Spain emerged from its recession well ahead of the predicted pace, Fitch Ratings revised Spain’s outlook from negative to stable. Spain's actual rating, however, remained unchanged. Though noting some weakness in medium-term growth prospects because of troubled industry sectors and high unemployment, the list of encouraging signs was surprisingly lengthy on the part of Fitch. Noted positives included the nation addressing its debt ratio problems at a faster-than-expected pace, improved credit financing conditions, noticeable adjustment following the bursting of its credit and real estate bubble and, perhaps most importantly, a more sustainable policy track.

“Authorities have made significant reforms of the labour market, pension system, fiscal framework and financial sector,” said Fitch in its statement. “The pace of reform is likely to slow in 2014-15 as external pressures ease and 2015 elections loom, but the effort made to date should put the economy on a surer footing.”

Last week, the Iberian nation finally provided long-absent hope in the form of its first quarterly economic growth since 2011's first quarter. Spain's gross domestic product in the third quarter increased by 0.1% over the previous quarter. Lackluster as the quarterly increase may seem, the bump could foreshadow real hope of long-awaited stabilization and, perhaps, a true rebound within a few years. After all, Spain has posted a quarterly GDP gain only five times since 2009, when the recession and EU debt crisis was just beginning.

- Brian Shappell, CBA, CICP, NACM staff writer

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