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Spain faced Friday the first important review of its rating after the general elections of 10-N and Fitch has chosen to maintain the status quo . Given the parliamentary phagocytement arising from the polls and the difficulties in obtaining support for the government agreement sealed by Pedro Sánchez and Pablo Iglesias, the agency prefers to leave the sovereign debt rating as it was: A- with a stable outlook.

The rating agency warns of the political challenges facing the country and the "degree of uncertainty" about the calendar for the formation of the Executive, its composition or the support it will have among the different parliamentary groups, collects Europa Press; Therefore, the firm does not believe that the new cabinet is formed before the end of the year, taking into account ERC's conditions on the independence of Catalonia for the investiture.

On the Catalan political tension, Fitch believes that the failed 1-O consultation has had a "limited impact" on the Spanish economy, but if these tensions go further, the agency warns that Spain's rating could be affected.

The uncertainty alluded to by Fitch is one of the main risks that the Spanish economy has to face in the coming months. In a context of global slowdown and with the slowdown found in the European Union, a weak government can be decisive to weather difficulties. In fact, Spain's ability to respond to the economic slowdown and debt commitments will depend on the Executive's ability to articulate a majority that allows it to move forward on the pending reform agenda and present General Budgets that banish the extended accounts since 2017 .

Several banks and analysts have stressed it in recent weeks. “In the medium term, these elections bring more polarization with the extreme right and nationalist parties as the real winners, while the central space is emptying. It is not good news to build the great consensus that Spain needs to face the pending challenges, ”said Rubén Segura Cayuela, chief economist for Europe at Bank of America Global Research, one day after the elections.

Challenges

And those challenges are not few. Starting with the evolution of the Spanish economy itself, which is no stranger to the global slowdown, the impact of the commercial war in Europe and the effects of factors such as Brexit or the German slowdown. Several international organizations have already revised downwards their forecasts for our country, despite maintaining growth levels above the euro zone average.

The latest forecasts from the European Commission, for example, indicate that Spain will close 2019 with a GDP increase of 1.9%, four tenths less than its July forecasts. And the same for 2020, when the progress is estimated at 1.5%. Regarding the deficit, Brussels believes it will be 2.3%, instead of the 2% provided by the Government for 2019.

In the case of Fitch, the agency maintains its growth forecasts for the Spanish economy and in terms of the deficit, forecasts a decrease for this year of 0.3 percentage points, up to 2.2% of GDP, while placing it at 2% by 2020.

Along with the deficit, another of the great challenges for Spain is the public debt, which stood at 1,207 million euros in the third quarter of the year, equivalent to 97.8% of national GDP, according to data from the Bank of Spain presented this Friday.

The evolution of the labor market is also worrying, where some deterioration continues to be appreciated. The month of November accounted for 20,525 more unemployed in relation to the previous month, to place the total number of unemployed in 3.2 million people, according to the latest data from the Employment Services published by the Ministry of Labor. It was the fourth consecutive month in which the figure grew and is also the biggest increase since 2016.

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