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Country Risk Quarterly Report. First Quarter 2019

March 13, 2019
Global Risk Aversion experienced high volatility during the quarter, which was reflected mainly in equity markets, but not in sovereign CDS or emerging currencies markets. The improvement seen since the beginning of the year was favoured by the Fed's announcement of a more patient stance in its interest rate policy.

Market Comment | Quiet start to the week with Brexit in the spotlight

March 12, 2019
Calm in markets at the start of the week after the eventful last week in which the dovish stance of the ECB hit European markets, spreading abroad. Moreover, last Friday’s release of weaker-than-expected US job data reinforced the “patient” shift of the Fed. This week will be crucial for the Brexit issue while the US-China trade negotiations also remain high on the agenda

Turkey | Sharp adjustment of domestic demand in 2018

March 11, 2019
Turkish Economy contracted by 3.0% yoy in 4Q18, slightly worse than expectations (-2.5% median vs. -2.2% BBVA Research). The economy technically entered into a recession as the QoQ contraction became deeper with -2.4% after -1.6% in 3Q18. We maintain GDP growth forecast at 1% for 2019 as recent impulses and base effects in the 2H19 may balance the poor performance of 1Q19.

Extremadura Economic Outlook 2019

March 11, 2019
The GDP of Extremadura would have grown by 2.6% in 2018, 0.5 p.p. above the growth of 2017, and is expected to increase by 2.4% in 2019 and 1.9% in 2020. This will add around thirteen thousand new jobs between the end of 2018 and 2020 and the unemployment rate shall drop to 21.2%, still 5.8 p.p. above the 2007 minimum.

Looser monetary policy

March 11, 2019
Some kind of policy reaction to the weak tone of Europe’s economy was expected at the ECB meeting last week, in view of the delay in signs of recovery, particularly after the more downbeat tone adopted by members of the ECB Board.

Paraguay | How much do external factors affect local economic activity?

March 9, 2019
The international environment has been deteriorating since the middle of last year. In this context, it is interesting to analyze how this is affecting and will continue to affect the economic activity of Paraguay. This document evaluates the impact of changes in some external real and financial variables on the Paraguayan GDP.

Mexico | Credit to the private sector maintains double-digit growth at the start of 2019

March 9, 2019
In January 2019, the nominal annual growth rate of the balance of the outstanding loan portfolio granted by commercial banks to the private sector was 10.1% (5.5% real). This growth was practically the same as in the previous month (10.0%) and lower than in the same month of 2018 (11.8%).

Market Comment | The ECB hits markets in the final part of the week

March 9, 2019
The ECB caused turmoil in European markets at the end of the week as the deployed measures exceeded the market’s expectations. In terms of growth, concerns remained: the National People’s Congress lowered China’s growth target and announced liquidity measures. Also the ECB’s EZ GDP growth forecast was revised down following the OECD's cut in the global growth outlook.

Financial Regulation: Weekly Update. 8 March 2019.

March 8, 2019
Highlights: BCBS and IOSCO issue statement on margin requirements. EBA issues guidelines on LGD estimation, recommendation on deposit protection after Brexit and consults on funding plans. EU TEG consults on green bond standards. BOE issues RDLs on the macroprudential authority and Brexit contingency plans. FRB issues statement on CCAR’s qualitative objections

Mexico | Fiscal reform in the United States: No significant effects yet for Mexico

March 8, 2019
Effective from January 1, 2018, President Trump's fiscal reform enforced, among other aspects, a reduction of the federal corporate income tax rate from 35% to 20%. As soon as discussions on the reform began, concerns started to arise in Mexico regarding its possible impact on investment in our country.

ECB | Draghi reacts in all fronts

March 8, 2019
The ECB strengthened its forward guidance on rates, with no rate hikes at least through the end of 2019. They also launched a new series of TLTROs. The central bank made a significant downward growth revision in 2019, but minor changes in the medium term. Despite the revision, risks remain tilted to the downside.

Market Comment | European assets hit by dovish stance of the ECB’s Governing Council

March 8, 2019
Financial markets captured all of the attention in today’s ECB meeting, in which there was a change in their forward guidance, signaling the hold in rates “at least through the end of 2019” along with a new round of liquidity measures, in order to keep the credit flowing. Apart from these new measures, the ECB forecast for the GDP growth was revised down for the eurozone.

Central Bank digital currencies: features, options, pros and cons

March 8, 2019
The emergence of cryptocurrencies is opening the way to Central Bank Digital Currencies (CBDCs). This paper highlights the pros and cons of issuing CBDCs under four different variants: from the more modest proposals to the most ambitious ones where there could be a serious disruption in financial intermediation.

Banking Outlook. March 2019

March 8, 2019
The quarterly earnings obtained in 3Q18 by the system (4,033 million euros) was the highest since the third quarter of 2009. In the first nine months of the year, earnings were 10,685 million euros versus losses of 4,961 million in the same period of 2017, a period in which the resolution of Banco Popular had an impact.

Mexico Banking Outlook. First half 2019

March 7, 2019
In 2018, the main source of growth in bank credit granted to the private sector was that allocated to companies. Traditional deposits reverse their downward trend, albeit at a moderate pace. Consumer Credit: recent developments and analysis of the slowdown in its growth rate. Mexican corporations’ foreign debt: the scenario changes, but risks for the bank remain limited.

Market Comment | European yields decline ahead of tomorrow’s ECB meeting

March 7, 2019
There is calm on the financial markets pending fresh trade developments and ahead of tomorrow’s ECB meeting. Today's release of increasing trade deficit of the US, mainly due to a rise in imports from China could be a key issue in further trade negotiations. In terms of growth, concerns over a global slowdown remain: the OECD has lowered its global growth forecasts.

Turkey | The CBRT reinforces credibility

March 6, 2019
The CBRT kept its policy rate (one-week repo, 24%) unchanged in line with expectations. The policy statement is almost the same with the latest one and maintains the tight tone by being prudent on inflation outlook and keeping the door open for further tightening if needed. In our view, the CBRT should wait for June to start a gradual easing cycle.

Madrid Economic Outlook. First half 2019

March 6, 2019
The economy of Madrid grew 3.1% in 2018 and will grow 2.8% in 2019 and 2.3% in 2020. This will add around 100,000 new jobs in the period and unemployment shall drop to 10.8%. Although pre-crisis GDP per capita will be recovered, creating more and better jobs remains as a challenge. However, measures must be promoted so that the recovery may be inclusive.

Balearic Islands Economic Outlook 2019

March 6, 2019
The economy of the Balearic Islands would have grown by 2.4% in 2018, is expected to advance by 2.2% in 2019 and moderate to 1.7% in 2020, linking seven consecutive years of economic recovery, with an average growth of 2.8% annually. This will add around 33,000 new jobs between the end of 2018 and 2020 and the unemployment rate shall drop to 9.5%.

Spain | 2019-20: stability goals that are tough to reach

March 6, 2019
The expansionary spending measures in 2018 have had a detrimental effect on the primary structural balance, leading to non-compliance with the stability goal for the third time in the last five years. In a scenario with no changes to fiscal policy, the deficit will not fall below 2% of GDP at the end of the 2019-2020 period.