Spain: near-term risky, medium-term more promising?

- "We see several near-term risks for the Spanish economy. GDP is likely to contract in the third quarter following the VAT hike, while the political environment remains difficult ahead of the 2011 budget vote."

- "We believe that the risks of a double-dip recession have receded, however, and that the economy is more likely to edge towards a protracted period of modest expansion in activity."

- "The main challenges are in the medium term as Spain has to switch to a more competitive growth model at the same time as the private sector succumbs to a drastic deleveraging process."

CreditAgricole Eco News 20100920