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Cecabank Report 2018
Our business model
According to the latest forecasts published by the IMF, the global economy
is expected to grow 3.7% in 2018, i.e. two tenths more than in 2017.
Among the advanced economies, the United States has consolidated the
maturity of its expansive cycle, with a GDP growth of approximately 3%
and a situation close to full employment. On the contrary, the eurozone
has registered a lower growth in 2018 than expected, with a growth rate
of 1.8% (2.4% in the previous year), dragged by a low performance of the
Italian, German and French economies. Added to this is the uncertain
outcome of the Brexit, which is becoming a burden for the UK economy,
one of Spain’s main trade partners.
The Spanish economy grew 2.5% in 2018, a relatively high rate when
compared to the eurozone, but lower than the previous year (3%). Domestic
demand remained considerably strong as a result of a greater dynamism of
all its components, and the external sector’s deterioration slowed down.
Private consumption remained stable, albeit at the expense savings rate,
which reached historical lows. Furthermore, investment slightly accelerated
in 2018 with a higher growth of the construction sector, especially in public
works; however, with a moderate investment in residential construction. By
contrast, exports dropped significantly, growing 1.9% compared to 5.2% last
year; therefore, the external sector affected GDP growth in a negative way.
Despite the favourable performance of the Spanish economy, 2018 closed
with a very negative balance in the markets due to a sentiment of growing
uncertainty in light of the downward revision of the global growth’s forecast,
the political conflicts in Europe and the trade tensions between the United
States and China.
With regard to stock markets, practically all international market indexes
have closed the year in negative figures. Losses have been higher in Europe,
with a -14.3% drop of the Euro Stoxx 50 (reaching -18% in the German Dax
and -15% in the Ibex). In the US, following a positive first half of the year, the
Dow Jones closed the year with a -5.6% drop.
Volatility has also been a predominant factor in the public debt markets in
2018, which was reflected in a widespread rise of risk premiums of European
sovereign bonds, especially, Italy’s risk premium, which ended the year above
250 bp after having reached 333 bp in October.
The Spanish and Portuguese risk premiums have been dragged upwards
mainly by the growing uncertainty caused by the Italian tax conflict. In the
case of Spain, which in the first quarter of the year registered a minimum
value of 66 bp (aided by an improvement in Fitch’s rating from BBB+ to
A- with a stable outlook), the premium reached its annual maximum in May
(134 bp), mostly led by the increased uncertainty in Italy, and then dropped
to 117 bp at year-end.
4 | 4.1
The monetary policy has been a
focus of attention while awaiting a
normalisation process