18 Jul 2014
Spain's growth momentum picking up - Goldman Sachs
FXStreet (Łódź) - Andrew Benito from Goldman Sachs observes that Spain's economic performance has benefited from financial conditions easing more than expected at the turn of the year.
Key quotes
"Spain’s leveraged national balance sheet has made its growth performance especially sensitive to easier financial conditions."
"Together with a decline in fiscal drag for next year, this leads us to revise up Spain’s growth outlook from +0.9% to 1.2% for 2014 and from +1.2% to +1.6% for 2015."
"Two main risks apply to Spain’s outlook: 1) Although its gradual fiscal adjustment is justifiable in the context of still weak demand, the size and persistence of the fiscal deficit imply some risk to sustainability."
"2)Spain’s political landscape is likely to become more fragmented over the next two years. This may see Spain’s commitment to continued adjustment
questioned."
"Nonetheless, we expect Spain to remain on its current adjustment path, while the ECB continues to ensure the feasibility of Spain’s managed deleveraging."
"The ECB’s latest policy measures will continue to facilitate those adjustments, even if Spain’s stretched balance sheet prevents a sharper ‘snap-back’ in the pace of recovery."
Key quotes
"Spain’s leveraged national balance sheet has made its growth performance especially sensitive to easier financial conditions."
"Together with a decline in fiscal drag for next year, this leads us to revise up Spain’s growth outlook from +0.9% to 1.2% for 2014 and from +1.2% to +1.6% for 2015."
"Two main risks apply to Spain’s outlook: 1) Although its gradual fiscal adjustment is justifiable in the context of still weak demand, the size and persistence of the fiscal deficit imply some risk to sustainability."
"2)Spain’s political landscape is likely to become more fragmented over the next two years. This may see Spain’s commitment to continued adjustment
questioned."
"Nonetheless, we expect Spain to remain on its current adjustment path, while the ECB continues to ensure the feasibility of Spain’s managed deleveraging."
"The ECB’s latest policy measures will continue to facilitate those adjustments, even if Spain’s stretched balance sheet prevents a sharper ‘snap-back’ in the pace of recovery."