ING: Spanish Elections Cast A Shadow Over The Economic Outlook

ING note that “the Spanish elections revealed a fragmented political landscape with no clear winner.”

• “Ongoing political uncertainty and the prospect of new elections may introduce an element of instability to the Spanish economy. This situation could hamper the country's long-term growth prospects through delays in implementing essential reforms. Moreover, it risks hampering efforts to improve public finances.””
• “The process of government formation in Spain has a time limit. If no prime ministerial candidate gains the support of a majority in parliament within 60 days, new elections are triggered.”
• “This scenario could also be detrimental to the European Union as Spain currently holds the EU presidency. Several important reforms are on the agenda in the coming months.
• “While ongoing political uncertainty and the possibility of another snap election could cast a shadow over the economic outlook, we should not overestimate the short-term impact either. Political uncertainties aside, the Spanish economy is expected to slow down in the coming months on the back of a slowdown of the world economy and the ECB rate hikes. The ongoing recovery of the tourism sector is the main growth driver this year. However, its positive impact will fade later this year and next.”