Spain: Economy losing momentum amid political paralysis – Rabobank

Rabobank analysts point out that Spain returns to the polls on November 10, but a radically different election outcome is unlikely.

Key Quotes

“A left-leaning minority government led by PSOE with outward support from Podemos is the most likely scenario.”

“It is hard to quantify whether years of political instability have negatively impacted economic growth, but it cannot be ruled out.”

“Spain may continue to pay the price for political inaction as efforts to make its economy more resilient to negative shocks have stalled.”

“Failure to bring down the structural deficit and public debt ratio when the economy prospered have left Spain with little fiscal space to counteract an abrupt slowdown.”

“We do expect the economy to decelerate further in the coming period and forecast growth to be 2.2% in 2019 and 1.7% in 2020.”