Crédito y Caución predicts that solid economic growth in Spain will moderate slightly in 2019 and 2020.
Domestic demand will continue to be the main driver, supported by export growth. The positive evolution of household consumption will be sustained by increased employment, wage growth, and low interest rates that boost investment.
The latest report from the credit insurer predicts that the unemployment rate will decrease in 2019 and 2020, although it will remain above the Eurozone average. The deleveraging trend among households and businesses continued in 2018, but there is still a long way to go, especially in the construction sector and among lower-income households. The financial sector has improved the quality of its assets. However, default levels remain high compared to other European Union members. The report predicts that the budget deficit will fall further in 2019 and 2020.
In this context, Crédito y Caución expects an improvement in insolvencies in Spain, which still maintain the highest level among all developed markets, compared to pre-crisis levels. Business bankruptcies registered a strong recovery in Spain from the beginning of the crisis until 2013. This trend, which changed from 2014 onwards, will continue in 2019, according to Crédito y Caución. The forecast is that the decrease in insolvencies will be in the order of 5%. However, this will keep insolvencies close to 5.350 cases, an abnormally high value compared to surrounding markets, quadrupling the 2007 figures.
