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Turkey | Some slow-down signals, more to come

October 17, 2018
The sharp decline in the unadjusted IP (-11%) in August, which is in line with our expectations (BBVA -11.5%), also implies a yearly contraction in industrial production in 3Q18 which will weigh on GDP growth. With 40% of information, our monthly GDP indicator (GBTRGDPY Index at Bloomberg) nowcasts a 2% yoy growth in September and we expect it to continue to decelerate.

European banks and the challenge of MREL

October 15, 2018
Who will pay for the next banking crisis in Europe, and how? One of the lessons learnt from the last global financial crisis is that there must be an end to public bail-outs of banks. To achieve this, it is necessary to define which creditors and which liabilities absorb losses in the event of an institution’s resolution.

U.S. Economic Outlook. October 2018

October 13, 2018
Economic conditions remain consistent with high growth in 2018 & 2019, upside risks to inflation contained. FOMC remains poised to raise rates in December. Baseline assumes three additional increases in 2019. Labor market slack continues to decline, as unemployment rate nears 50 year lows at 3.7%.

Mexico |Main source of credit growth to private sector continues to be credit to companies

October 12, 2018
In August 2018, the nominal annual growth rate of the balance of the current credit portfolio granted by commercial banks to the private sector was 11.2% (6.0% real). This rate was lower than the previous month (11.4%) and the same month of 2017 (13.3%).

Financial Regulation: Weekly Update. 11 October 2018

October 12, 2018
Highlights: FSB issues report on crypto-assets. EBA updates its risk dashboard. Council of the EU adopts conclusions on climate change and anti money laundering directive. EC adopts delegated acts on supervisory reporting. UK Treasury issues documents and Statutory Instruments preparing for Brexit. US Agencies Agencies issue final Swap Margin Rule.

U.S. Recession Risk Monitor. Fourth quarter 2018

October 11, 2018
The probability of an economic recession within the next 12 months remains low. Alternative models show increasing likelihood but also indicate relatively low probability. Overall financial conditions remain accommodative. However, a sharp correction in equities and corporate spreads is possible. Economic fundamentals for households and financial institutions remain solid.

U.S. | Fighting Ocean Plastic Pollution

October 11, 2018
Bringing opportunities in the circular economy. A crisis of planetary proportions. An ocean of plastic. Preventing plastics from reaching the ocean. For banks, plastics could be more than credit cards.

Financial Regulation Outlook. Fourth quarter 2018

October 11, 2018
European NPLs: A complex problem. IMF report on the euro zone resolution framework. UK proposal for financial services post Brexit. What to expect from the forthcoming Spanish financial sandbox?. ESAs reform: Slow legislative process in the EU institutions. Three years of CMU: Progress and challenges ahead.

Cantabria Economic Outlook 2018

October 9, 2018
The economy of Cantabria grew 3.2% in 2017 and will moderate its growth rate to 2.8% in 2018 and 2.6% in 2019. It will create around 10,000 jobs until the end of 2019, although some risks are more likely now than a few months ago. The level of absolute and per capita GDP will recover, but the challenge is to create more and better employment.

China | Peering into the local government debt: rising risks call for prompt actions

October 9, 2018
We attempt to answer the questions regarding China’s local government debt: (i) what’s the total size of the local government debt; (ii) why the local government debt has grown to today’s level despite the central government’s clamping-down efforts; (iii) whether the risks are still manageable; and (iv) how can the authorities solve this local government debt problem.

Mexico | USMCA: uncertainty reduced, but not removed

October 9, 2018
We now know the content of the new North American free trade agreement, to be known as the United States-Mexico-Canada Agreement, or USMCA. The three countries’ negotiating teams announced details on Sunday, just minutes before the deadline for the Trump administration to submit it to Congress.

Winter is coming

October 8, 2018
In economics, as in other sciences, history helps us anticipate the shocks that might derail expansion phases such as the current one. Some of the biggest crises have originated with US Federal Reserve rate hikes. This time around, normalisation is being carried out gradually and steadily, with communication geared to avoiding unnecessary scares.

More taxes on banks: no free lunch

October 8, 2018
It is always best to be very careful with changes in taxes. Increases can be dangerous if they hamper growth and job creation, just as reductions can be if they affect the sustainability of the welfare state and equity. So, What is the extent of the effects of an additional tax on banks?