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China | A big data approach to gauge trade-war fears in Asia

September 18, 2018
In this watch, we examine the evolving trade-war sentiment across Asian economies using Big Data analysis.

Why is the share of labour in total income falling?

September 17, 2018
It seems that in the age-old battle between labour and capital the latter has been gaining ground recently. In the majority of advanced economies the share of national income going to wage and salary earners is falling. What is the reason for the fall in labour’s share of income? There are several possible explanations.

Fighting an uphill battle - the overcapacity in China's steel industry

September 17, 2018
This presentation analyzes China's overcapacity problem in the Iron & Steel industry. On top of reviewing the past (unsuccessful) efforts to eliminate overcapacity, it attempts to provide policy suggestions for the clean-up of obsolete capacity.

Global | Solid global growth, but moderating amid heightened risks

September 14, 2018
Global growth moderates, but remains in line with our GDP growth projections of 3.8% for 2018. Manufacturing activity has lost momentum and the impact from protectionism is starting to weigh on confidence, global trade and investment. Risks have also heightened over the summer due to political uncertainty and idiosyncratic vulnerabilities in emerging markets.

Financial Regulation: Weekly Update. 14 September 2018

September 14, 2018
Highlights: ESAs issue report on risk and vulnerabilities of the financial sector. ESMA issues MiFID II compliance table (only for some provisions of it). ECB receives recommendation from private sector on ESTER. UK Treasury consults on the transposition of the EU Bank Creditor Hierarchy Directive. US Agencies confirm the role of supervisory guidance.

China | Recent easing measures helped to stabilize growth

September 14, 2018
August economic indicators are announced today, suggesting the recent monetary and fiscal easing measures helped to stabilize economic growth. However, headwinds from domestic deleveraging and the escalating trade war will continue to weigh on growth. Monetary and fiscal policy to become more pro-growth although the authorities remain vigilant on financial vulnerabilities.

The ECB on track to end QE

September 14, 2018
Asset purchases to be halved since September. No changes in interest rate forward guidance

Spain | The economy continues to grow, although less than estimated at the beginning of 3Q

September 14, 2018
The growth of the Spanish economy could remain at around 0.6% quarterly during 3Q, below that expected at the beginning of the quarter. This, together with the continued risks hanging over the economy, reinforces the downward bias in the 2018 growth forecasts projected by BBVA Research (2.9%).

Turkey | The CBRT delivers a new bold action

September 14, 2018
The Central Bank (CBRT) hiked policy interest rate (one-week repo) by 625bps to 24.0%. The hike is remarkably higher than expectations (21% Bloomberg) and even ours (22.75% BBVA Research). The decision of the CBRT doesn't only contribute to fight against inflation and inflation expectations but also supports financial stability by decreasing the pressures over the currency

U.S. Economic Outlook. September 2018

September 13, 2018
Economic conditions remain consistent with high growth and moderate inflation in 2018 & 2019. FOMC remains poised to raise rates at their upcoming meeting in September and again in December. Baseline assumes three additional increases in ‘19. Labor market conditions remain auspicious: strong job growth, low unemployment, rising wages and record-high job openings.

U.S. | What’s behind the slowdown in bank deposits?

September 12, 2018
Bank deposits have slowed since the end of 2015 and further more since the beginning of 2018. The slowdown matches historical patterns during late-stage economic expansions. The likely cause is the higher attractiveness of deposit alternatives as deposit interest rates have not increased commensurately with other short-term interest rates.

Country Risk Quarterly Report. Third Quarter 2018

September 11, 2018
The increased synchronization and depreciation of Emerging Market's currencies due to both Fed normalization process and, in some cases, idiosyncratic vulnerabilities uprise, have not become a full sell-off across geographies and assets. Beyond markets ups and downs, the resumed leverage trend is a concern for some countries (China)

Turkey | 2Q growth signals the adjustment is underway

September 10, 2018
Turkish economy grew by 5.2% (YoY) in 2Q18 (5.3% Consensus vs. 5.5% BBVA Research). As expected, the seasonally and calendar adjusted quarterly growth rate decelerated from 1.5% in 1Q18 to 0.9% in 2Q, which means that the adjustment is underway. We expect GDP to grow 3% in 2018.