Since 2009, when Spain first lost its top credit rating at Standard & Poor’s, it hadn’t been upgraded by any of the three main rating companies. Moody’s Investors Service and S&P still rate Spain one step from junk, but for Fitch the situation has improved.”Spain has improved its policy track record,” said Fitch in a statement, adding that significant reforms “should put the economy on a surer footing”.
“Fitch forecasts that the economy will begin to recover in 2014 as headwinds from fiscal austerity and financing conditions ease. As is currently the case, the recovery will be primarily driven by net exports; domestic demand will remain subdued for a longer period. The agency maintains its potential growth assumption of 1.5% in the second half of the decade”.
Spain left behind a more than two-year recession in the third quarter. The main Ibex 35 stock index has risen about 21 percent this year and foreign investors are returning to the market. For Fitch the recovery is coming sooner than it had forecast, and the adjustment from a current account deficit to surplus has been faster than expected too. However, unemployment (26% in the third quarter) remains huge and the economy will remain weak, growing 0.5 percent in 2014, it added, less than the government’s 0.7 percent estimate.