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Updated: 2 hours 46 min ago

Eurozone | Unchanged forecast of steady moderate growth, but downward risks are mounting

October 26, 2018
Eurozone GDP growth has stabilized at lower levels and remains robust on strong domestic demand. We maintain our forecasts unchanged at 2.0% for 2018 and 1.7% for 2019, but leading indicators have moderated, raising concerns about sustained growth in a context of monetary policy normalization, strains on Brexit and Italy's budget and the risk of an intensified trade war.

Turkey | The CBRT stays on hold

October 26, 2018
The Central Bank (CBRT) left its policy rate (one-week repo, 24%) unchanged in line with the consensus (vs. our expectation of 100bps hike). The press release after the decision is almost the same with the previous one, except for the stress over the slow-down in economic activity “partly due to tighter financial conditions”.

Presentation Argentina Economic Outlook. Fourth quarter 2018

October 25, 2018
The extended currency crisis led to a renegotiation of the agreement with the IMF which increased funding for the aid package to Argentina. The new, more restrictive monetary program is expected to decelerate inflation and stabilize financial variables. In this more adverse scenario we estimate GDP will fall by 2.4% in 2018 and 0.3% in 2019.

Mexico | Inflation Flash. First half October 2018 (data)

October 25, 2018
Inflation eases in 1H October as expected but MXN pressures keep a possible hike on the table.

Spain Economic Outlook. Fourth quarter 2018

October 24, 2018
The expected growth of the Spanish economy is revised downwards, to 2.6% in 2018 and 2.4% in 2019, due to the negative surprises registered in the first semester. In addition, a downward bias is maintained over the forecasts presented in this scenario, given the increase in uncertainty, both external and internal.

Catalonia Economic Outlook. Second half 2018

October 23, 2018
The GDP of Catalonia grew by 3.3% in 2017, and it is expected to advance at a rate of 2.5% in 2018 and 2.3% in 2019. 130 thousand jobs will be created and the unemployment rate will be reduced to 10%. In the absence of uncertainty, investment in equipment and employment would have shown greater growth.

Spain | The effect of uncertainty in Catalonia: a synthetic control analysis

October 23, 2018
Private sector Social Security registrations in Catalonia have slowed down markedly since mid-2017. The analysis presented suggests that the increased uncertainty in the region had a negative effect on employment, reducing job creation by about 30,000 jobs.

Mexico | Inflation Flash. First half October 2018

October 23, 2018
We expect a headline inflation print of 0.45% HoH in the first fortnight of October, translating into a 4.99% YoY number, compared to 5.17% in the second fortnight of September.

Mexico | Monthly report on banking and the financial system. October 2018

October 23, 2018
Update of the risk assessment by the Financial System Stability Council (CESF). The International Monetary Fund updates its Financial Access Survey. The CNBV, Mexico’s Banking and Securities Commission, publishes its Financial Access Report. Mortgage interest rates remain attractive so far in 2018.

Banco de México: the right decision

October 23, 2018
Last week saw the publication of the minutes of the Banxico Governing Board's latest monetary policy meeting. As we already knew, it was decided to leave the monetary policy rate unchanged at 7.75%, in a split vote in which four members voted in favour of no change and one voted to increase the rate by 25 bp. In my view, the majority decision seems to be the right one.

Brazil Economic Outlook. Fourth quarter 2018

October 23, 2018
The Brazilian economy will continue to recover slowly in the coming years. The gradual strengthening of domestic demand and the normalization of food prices will help to drive both inflation and interest rates upwards. The next government will likely take measures to reduce fiscal vulnerability, although it will hardly manage to approve an ambitious social security reform.

Central bank digital currencies: An assessment of their adoption in Latin America

October 22, 2018
This document focuses on identifying factors affecting the implementation of a Central Bank digital currency (CBDC) in Latin American countries. The adoption of a CBDC (non-universal) for the interbank and wholesale payment system would lead to a relatively minor level of disruption in the economy. In this case, the implementation costs is an important issue.

Slowdown: Temporary or permanent?

October 22, 2018
Spain’s GDP growth remains strong, although we have seen moderation relative to previous years. While it is always tempting to seek a single culprit, this seems to be rather the combined result of various factors. Some of these are temporary, but others are here to stay.

Presentation Spain Economic Outlook. Fourth quarter 2018

October 19, 2018
The expected growth of the Spanish economy is revised downwards, to 2.6% in 2018 and 2.4% in 2019, due to the negative surprises registered in the first half. In addition, a downward bias is maintained over the forecasts presented in this scenario, given the increase in uncertainty, both external and internal.

Financial Regulation: Weekly Update. 19 October 2018

October 19, 2018
Highlights: BCBS issues stress testing principles, consults on treatment of cleared derivatives in the leverage ratio, and issues statement on window-dressing behaviour for the leverage ratio. The NGFS issues its first progress report. OJEU publishes implementing regulation regarding critical benchmarks. PRA and FCA issue consultations on climate related financial risks.

Global | More moderate and heterogeneous growth, with increasing risks

October 19, 2018
We have revised downwards our forecasts for global growth to 3.7% in 2018 and 3.6% in 2019 due to the recent slowdown in emerging markets, in a context of monetary policy normalization and intensification of risks related to protectionism and political uncertainty. The US is expected to grow at 2.8% in 2018 and 2019, while the Eurozone and China will decelerate next year.

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