Newly released market study: Spain Country Risk Report Q2 2016

Spain's economy will remain among the fastest growing in the eurozone in 2016, in spite of the country's ongoing political impasse.

Tailwinds from cheap oil and ECB asset purchases (QE) will support short-term growth, but will act as a disincentive for politicians to implement the structural reforms needed to boost long-term growth.

Spain's current account surplus has peaked and will shrink over the coming years, returning to deficit in around 2020.

Already unrealistic budget deficit targets will move further out of reach once a new government is (eventually) formed in Spain.

Full Report Details at
- http://www.fastmr.com/prod/1123384_spain_country_risk_report_q2.aspx?afid=301

Spain is set for a period of high political instability, as the December 20 election produced no clear winner and left Spain with an extremely divided political system.

Major Forecast Changes

A further leg down in oil prices (oil has dipped below USD30/bbl) has prompted us to revise up our real GDP forecasts to 2.5% in 2016 and 2.2% the following year, from 2.4% and 2.1% previously.

Key Risks

If coalition government negotiations persist for longer than we expect or fresh elections are needed, then this would have downside impacts on consumer and business confidence.

An extended period of uncertainly would prompt us to downgrade our real GDP forecasts for Spain.

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