Spain's strong growth outlook mitigates political risks

Domestic demand continues to be strong: rising disposable income and improving confidence. Growth of over 3.0% is expected in 2015 and at c.2.5% in 2016. Improved competitiveness also helping exports. The housing market is turning, housing prices rose by 4.2% in Q2 15 (after nearly a 40% nominal price correction since early 2008); home sales have picked up; mortgage conditions have eased. 

The fiscal outlook remains challenging. The primary balance stood at -2.5% of GDP in 2014 and it will take additional fiscal measures to achieve a balance consistent with a clear sustainable path for public debt, which will stay at nearly 99% of GDP this year and next