Ratings agency Fitch has today lowered its outlook for economic growth in Spain and now suggests the country’s economy will experience zero-growth in 2012 followed by just 1.5% growth in 2013.
The agency had previously predicted growth of 0.5% for 2012 and says this new reduction is in part due to Spain’s high and increasing unemployment numbers which the Ministry of Employment in Spain confirmed as 4,422,359.
Fitch also added that the unemployment problem in Spain could cause further issues for the banks and hinted at the possibility of further reductions in ratings for some of Spain’s major financial institutions such as Banco Santander, Banco Popular and BBVA.
Less than three months ago the agency reduced the ratings of Banco Santander, Banesto, BBVA, CaixaBank, Banco Popular y Banco Sabadell.
“The deepening of the crisis in the Euro-zone, the deterioration of the macroeconomic atmosphere in Spain and Europe and an increase in the volatility of the market and the desire to get away from risk, could have a negative effect on the credit profile of the banks,” the agency said adding that the Spanish banks “are unlikely to return to the cheap funding costs that were available to them in the past”.