Market Watch: S&P cuts Spain to 'AA' on weak economic growth

Standard & Poor's Ratings Services on Wednesday lowered Spain's long-term sovereign credit rating to AA from AA+.

"We now believe that the Spanish economy's shift away from credit-fuelled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed," said Marko Mrsnik, an S&P credit analyst.


"We now project that real GDP growth will average 0.7% annually in 2010-2016, versus our previous expectations of above 1% annually over this period," he added.

Private sector debt, which is at 178% of GDP, and an inflexible labor market as well as low export capacity are all burdening Spain's economic growth, according to the ratings agency.

The outlook is negative.

MarketWatch