Economy

Spain's debt to decline gradually after pandemic, Fitch says

'Robust growth rates will be accompanied by declining unemployment,' global rating agency says

Ovunc Kutlu   | 19.10.2021
Spain's debt to decline gradually after pandemic, Fitch says

ANKARA

Spain's government debt is expected to decline gradually after the coronavirus pandemic, the global rating agency Fitch Ratings said Tuesday.

The government debt ratio is expected to decline to 116.6% of gross domestic product (GDP) by the end of 2023, from 120% in 2020, the agency said in a report.

The deficit is also estimated to narrow to 4.5% in 2023, from 11% in 2020.

"The Spanish economy entered the pandemic crisis in much better shape than at the onset of the global financial crisis," the report said.

"Next Generation EU funds could boost medium-term growth potential and accelerate the pace of public debt reduction," it added, referring to the EU economic recovery package.

Fitch said it forecasts Spanish economy to expand by 6.3% in 2021 and 6.4% in 2022, adding: "Robust growth rates will be accompanied by declining unemployment."

While Spain's credit rating is "A-" with a stable outlook, Fitch warned that failure to implement a credible economic and fiscal strategy could lead to a negative rating action.

However, a firm decline in government debt to GDP ratio in the medium term, or a sustained economic recovery, may have a positive impact on the country's rating, it added.

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