We project annual real GDP growth in Spain to average 2.5% over our forecast horizon of 2016-2019. We expect Spain's general government budgetary deficit to narrow only gradually from last year's wide 5.2% GDP deficit, assuming the labor market recovery continues and deflation risks remain at bay. We are affirming our 'BBB+/A-2' ratings on Spain. The stable outlook balances our expectations of Spain's continued economic recovery against the risks posed by Spain's high net external liabilities, amid political uncertainty. On April 1, 2016, Standard&Poor's Ratings Services affirmed its long- and short-term foreign and local currency sovereign credit ratings on the Kingdom of Spain at 'BBB+/A-2'. The outlook is stable. The 'BBB+' long-term rating on Spain reflects our view
