February 20, 2020

Spain: Headwinds ahead but Bonos to stay solid

Share on facebook
Share on twitter
Share on linkedin
Share on email

In Short

In Spain, the new, fragile left-wing minority coalition plans to unwind key elements of the 2012 labor market reforms and intends to increase income and corporate taxes.
Spain: Headwinds ahead but Bonos to stay solid
Share on facebook
Share on twitter
Share on linkedin
Share on email

Highlights:

  • In Spain, the new, fragile left-wing minority coalition plans to unwind key elements of the 2012 labor market reforms and intends to increase income and corporate taxes.
  • Activity will diminish on the back of reduced employment growth, receding economic slack, an upwards adjustment in the household savings rate and elevated political uncertainty.
  • We see GDP growth moderating towards 1.4% by 2021, broadly in line with potential. Thereby we expect the outperformance of Spain against the euro area lasting since 2015 to narrow significantly.
  • The excellent performance of Spanish sovereign bonds in recent years will fade out. While moderating, Spanish growth will remain above the euro area average and fiscal metrics are seen to improve slightly. Amid the search for yield this will trigger somewhat tighter sovereign spreads and Spanish Bonos are expected to perform better than euro area core government bonds going forward.

Read the full publication below.

 

SPAIN: HEADWINDS
AHEAD BUT BONOS
TO STAY SOLID

Also interesting

Coronavirus model
March 5, 2021
Market Commentary

COVID-19 FACTS & FIGURES

Up-Trend-Line-Graph-and-Silhouette-Oil-Pumps-at-Oil-Field-with-Sunset-Sky-Background
March 5, 2021
Focal Point

Oil: strong, but not permanent price increase

Cubes-wood-arrows-up-down-red-and-green
00:06:05
March 4, 2021
Podcast

The Spotlight ǀ Generali Investments Podcast: Reflation boon and bane