Top ratings agency Standard & Poor’s confirmed Spain’s credit rating at BBB- in a statement issued by analysts this morning, citing that the struggling nation’s adherence to implementing a wide-ranging structural reform programme warranted the grading.
However, as the long-term outlook remains negative a downgrade could still occur if Spain falters in its reform, the country’s economic performance worsens or the budget deteriorates ‘significantly’.
And there are still momentous hurdles Spain must overcome, such as record high levels of unemployment, uninspiring prospects for medium term growth and considerable external debt.
Standard & Poor’s have estimated that the Spanish economy will contract by 1.5 per cent in 2013 before returning to weak growth in 2014 and posting expansion of roughly 0.6 per cent. Meanwhile, unemployment will stay ‘very high, at above 26 per cent, at least until there is a sustained economic recovery.’
Although Spain has so far managed to avoid requesting a full bailout, the nation has been mired in recession for the last six years and rated just one to two levels above junk status by the three main ratings agencies.
According to the European Commission, by 2014 Spain’s debt load will have exceeded the Eurozone’s average for the first time since the common currency was introduced.
Although the Euro continues to trade strongly against the US Dollar it has dipped slightly from yesterday’s highs. The common currency has also weakened against the Pound. The British currency has been boosted in recent days by a stream of better-than-forecast economic data.
Several pieces of influential Eurozone data could impact the Euro’s movement in the hours ahead. Of particular interest will be Eurozone CPI and unemployment figures and the meeting of ministers from Germany, France, Spain and Italy.
Euro (EUR) Exchange Rates
As of 08:50
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3339 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8503 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3892 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6534 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.3575 <
