Last Friday, the credit rating agency Standard & Poor’s (S&P) upgraded Spain’s credit rating from “A” to “A+.” This decision was based on the country’s vigorous economic growth, the positive impact of immigration on the labour market, and the success of its exports, which have low exposure to US tariff policies.
In its report, S&P explained that a decade of private sector deleveraging in Spain has led the country to a balanced external balance sheet, reducing the economy’s sensitivity to changes in external financial conditions. This has increased Spain’s resilience to economic shocks.
However, S&P noted that it would lower Spain’s debt rating if a fiscal deterioration were to cause a possible reversal of the “recent improvements in external and government debt dynamics.” According to the agency, this could result in budget “slippages” in a context of high political fragmentation. In this regard, the agency does not rule out that trade tensions could eventually erode Spain’s trade surplus. Lastly, the agency indicated that Spain’s main weakness is its high level of public debt, which is slightly above 100%.
