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Digital Economy Outlook. January 2017

January 20, 2017
In this issue we will focus on: Algorithms challenge the banking industry; Does blockchain fit into current legal frameworks?; Turning the spotlight on shadow banking: pros and cons of the darkness and; The Internet of Things and digital banking

China | Slowed growth on a soft-landing track

January 20, 2017
China’s 2016 Q4 GDP came out today at 6.8% y/y, marginally higher than the market expectations and the previous reading. The 2016 full year GDP turned out to be 6.7%, surpassing the authorities’ target of 6.5%. December FAI and IP decelerated marginally from their previous readings. As growth headwinds are still ahead, we expect growth to continue its downtrend this year.

The ECB remains patient

January 20, 2017
As widely expected, the ECB has remained on hold and has not changed its communication. On inflation, also as expected, the ECB has put the focus on underlying inflation -that remains subdued- instead of headline, thus trying to dampen any concerns on inflation. Draghi remarked that the tapering issue was not discussed and he wanted to avoid any speculation on this issue

Eurozone | Some changes for the better

January 20, 2017
We continue to see resilience to the various potentially disturbing political events in 2H16. So far, confidence data allow us to be slightly more optimistic. Still more, the recovery of exports and the strength of consumption at the end of 2016 show that positive underlying signs are taking root. Our model suggests GDP to have gained momentum to 0.5%/0.6% QoQ in 4Q16.

Impact of capital regulation on SMEs credit

January 18, 2017
The Supporting Factor was introduced in Basel III with the aim of avoiding a reduction in the flow of new credit to SMEs, and the CRR revision published in November 2016 even proposes enlarging its scope to exposures above €1.5bn (but with a lower parameter).

For families, low interest rates and deleveraging are good news

January 16, 2017
The current environment of low interest rates is expected to persist for quite some time, at least in Europe. This situation has affected Spanish households and businesses both positively and negatively. Specifically, the impact of the ECB's expansive policies has been positive for families, which have seen their borrowing costs fall by more than their income from deposits

Forecasts in the post-truth era

January 16, 2017
The economic confidence indicators have clearly improved in the major regions in the last quarter of 2016, especially in the manufacturing sector, world trade seems to be recovering after its lacklustre start to the year, and consumption continues to be relatively strong.

U.S. | Weekly podcast: Employment, retail sales, inflation and housing starts

January 14, 2017
Weekly economic update focusing on the major economic indicators to be released the week of January 16, 2017. Special topic: Review of the December jobs and retail sales reports

Mexico | Monthly Report on Banking and the Financial System. January 2017

January 13, 2017
The CNBV published the Report on Financial Savings and Financing in Mexico with figures to June 2016. Banco de Mexico publishes its report on compliance with the Law for Transparency and Regulation of Financial Services. Update to the Bank of Mexico’s Annual Report on the Financial System

Financial Regulation Outlook. First quarter 2017

January 12, 2017
Finalisation of Basel III. New package of banking reforms in the EU. TLAC and MREL. SSM supervisory priorities and SREP methodology. A flawed EDIS proposal. Turning the spotlight on shadow banking. Geopolitics and Regulation

Spain | Economic growth closed up in 2016 and shows biases for 2017

January 11, 2017
The Spanish economy gained traction at the end of 2016. It is estimated that quarterly GDP growth (QoQ) could have been 0.9% in 4Q16, one tenth more than estimated a month ago and two-tenths above the increase observed in 3Q16. Thus, 2016 would have closed with an annual average growth of around 3.3% and there would be a moderate upward bias over the 2017 forecast (2.5%).