Spain faces risks “on the downside” to its credit rating as growth slows and regional governments fall behind schedule on deficit targets, Fitch Ratings Director Douglas Renwick said.

“Risks for the credit rating are clearly on the downside,” London-based Renwick said in a telephone interview Tuesday. “The regional deficit performance adds to pressure on the central government to make the needed cuts.”

Fitch rates Spain AA+ with a “negative” outlook, and Renwick said weaker growth, failure to meet deficit targets, or larger-than-forecast use of public funds to rescue banks could be “clear triggers for the rating.” Moody’s Investors Service has an Aa2 rating on Spain and Standard & Poor’s rates it AA.

Spain’s regional governments are behind schedule to meet deficit targets, according to data released last week that Moody’s said was “credit negative.” The regional governments manage more than a third of public spending, including health and education, and are suffering from a slump in revenues linked to real-estate transactions.

The 17 semi-autonomous regions posted a budget deficit of 1.2 percent of gross domestic product in the first half, the Finance Ministry said on Sept. 8, citing data that isn’t directly comparable to the figures used in the final deficit calculations. The regions have a deficit target of 1.3 percent of GDP this year.

Deficit Goal

That targeted shortfall is part of the overall public- deficit goal of 6 percent of GDP for this year, down from 9.2 percent in 2010.

Renwick said a slowdown in Germany, Europe’s largest economy, would make it more difficult for Spain to meet its 1.3 percent 2011 growth forecast. The government cut the prediction last year to reflect the impact of austerity measures.

“For Spain, meeting the official GDP forecast is becoming more and more challenging, especially because the German economy is weakening,” Renwick said.

Finance Minister Elena Salgado said in an interview on Aug. 19 that reaching the target is “a bit more difficult than it was a quarter ago” and depends on foreign markets. Economic growth slowed to 0.2 percent in the second quarter from 0.4 percent in the previous three months, while France, which is Spain’s biggest trading partner, stagnated, and Germany almost stalled.