Spain’s BBB credit rating affirmed by S&P

Ratings agency Standard & Poor’s affirmed the credit rating of Spain at BBB as a result of countrys commitment to implement comprehensive fiscal and structural reforms. The outlook on the long-term rating remains negative, which still shows the potential for a downgrade, in case political support on the reform agenda dwindles or the budget “significantly” worsens, S&P analysts Marko Mrsnik and Frank Gill said in a statement today, Bloomberg imparted.

Spains rating is supported by a diversified and prosperous economy and the government’s implementation of financial, fiscal and structural reforms, the analysts added.

However, Spain still confronts high external debt, a “relatively” low medium-term economic growth prospects and a highly segmented labor market, S&P said, cited by Bloomberg.

The European Commission projects that Spain’s debt load next year will be above the average for the whole euro region for the first time in the currency’s history. Rated one to two levels above junk by S&P, Fitch Ratings and Moody’s Investors Service and still experiencing a sixth consecutive year of recession, the Euro zone’s fourth largest economy has so far managed to avoid a full bailout.

Estimates point that country’s real Gross Domestic Product will contract by about 1.5% this year, while next year’s real GDP growth will be about 0.6% due to factors such as weak consumption.

Ultimately, Spains Unemployment Rate will remain “very high, at above 26 percent, at least until there is a sustained economic recovery,”, S&P said.