Spain challenges S&P growth forecast

29th April 2010, Comments 0 comments

The Spanish government on Thursday insisted that Standard & Poor's had underestimated Spain's growth prospects a day after the ratings agency downgraded the country's credit standing.

S&P forecast average Spanish annual growth of just 0.7 percent from 2010 to 2016, which according to economy secretary Jose Manuel Campa is "clearly below estimates made not only by the government but by most national and international analysts as well."

The government predicts growth of 0.3 percent this year followed by 1.8 percent in 2011, 2.9 percent in 2012 and 3.1 percent in 2013.

A spokesman for the economy ministry said no public forecast has been issued beyond 2013.

Spain has been grappling with recession since 2008 and its jobless rate now tops 20 percent.

With a public deficit equal to 11.2 percent of gross domestic product, Spain is seen as vulnerable to financial market pressures, similar to those weighing on Greece.

S&P said Wednesday it was lowering Spain's long-term sovereign credit rating by one notch to AA from AA+ because the country was "likely to have an extended period of subdued economic growth, which weakens its budgetary position."

The agency also said its outlook for Spain was negative and the country could face another downgrade, a decision which sent the euro plunging to a one-year low against the dollar and European stock markets tumbling.

© 2010 AFP

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