The BBVA Research team has published its Economic Outlook for fourth quarter 2018, a timely look at the anticipated economic impact of midterm elections.

BBVA Compass Chief Risk Officer Javier Hernández has a long history with BBVA, the parent of BBVA Compass, having joined the bank in 1998. Since that time, he’s been through financial up and down swings, as well as watched the dawn of the tech revolution in finance – all of which has given him an unbeatable perspective on the function of risk in such times. He sat down with External Communications to tell us more about his role, the evolution of Risk Management and the impact of digital.

BBVA Research lowered growth expectations for Spain’s GDP to 2.6 percent in 2018 and 2.4 percent in 2019 (representing a drop of 0.3 and  0.1 percentage points, respectively, from the forecast of three months ago). The downward revision is primarily due to a more modest performance in the first half of the year. Lower growth of both exports and private consumption are two important factors contributing to the revised projections. This was the view detailed in the most recent report on the Spanish Economic Outlook, presented today by Jorge Sicilia, chief economist at BBVA Group and director of BBVA Research; Rafael Doménech, head of Macroeconomic analysis at BBVA Research; and Miguel Cardoso, BBVA Research’s chief economist for Spain and Portugal.

After the hike in interest rates by the Central Bank of Turkey on September 13 (625 basis points from 17.75 percent to 24 percent), the Turkish government today (Thursday) unveiled a new economic program for the next three years (2019-2021). BBVA Research in a report released Thursday believes that both monetary policy and fiscal policy are now better geared toward correcting inflation and the imbalances of the Turkish economy.

BBVA Research maintains its GDP growth forecasts for Spain at 2.9 percent for 2018 and 2.5 percent for 2019. The increasing likelihood that some risks might finally materialize could drive the Spanish economy to slower growth scenarios, according to the latest Spain Economic Outlook report published by BBVA’s studies unit. The report was presented today by Jorge Sicilia, Chief Economist of BBVA Group and Head of BBVA Research, Rafael Doménech, Head of Macroeconomic Analysis of BBVA Research and Miguel Cardoso, Chief Economist Spain and Portugal. Under this scenario, the country is expected to generate about 880,000 jobs over the two-year period, causing the country’s unemployment rate to drop below 14%.

The main indicators show the U.S. economy has performed well in the year so far, with a rise in Gross Domestic Product (GDP), employment and wages as well as higher exports.

“I love food and I am mad about sports.” Hearing him talk about his hobbies, Jaime Sáenz de Tejada (Madrid, 1968) comes across as someone who enjoys life. As a kid he was into basketball and track and field. Later, he got interested in paddle tennis and golf. About a year and a half ago he fractured his thigh bone forcing him to focus a bit more on swimming and cycling. He defines himself as a lover of Peruvian cuisine, because it offers “the best fusion of sensitivities from many places, with ingredients of unparalleled quality.” He’s even given cooking chifa (a fusion of Peruvian ingredients and traditions with Cantonese elements) a go, but “being surrounded by so much talent, I would never dare to compete in culinary skills.” Married and with five children – “one of them is on his way to becoming a chef, just like his mom,”- he’s been a part of BBVA for more than 25 years. In 2014 he became the Group’s Chief Financial Officer. He devotes most of his scant free time to “living his children’s education intensely and sharing activities with them.” He’s been lucky to live in New York – at two different periods – , London, Uruguay and Peru.

As expected, the European Central Bank left interest rates and its asset-purchasing program, or quantitative easing (QE), unchanged. After its policy meeting, Mario Draghi instead stressed concerns about the global risks posed by protectionism as well as the need to focus on inflation.

Although the uncertainty surrounding Catalonia’s economic policy hasn’t had the expected negative impact, the favorable global environment seems to have offset the its negative effect on production and employment. Consequently, BBVA Research has upgraded its 2018 and 2019 GDP growth forecasts for Spain to 2.9% and 2.5% from 2.5% and 2.3% respectively. The report was presented today by Jorge Sicilia, Chief Economist of BBVA Group and Head of BBVA Research, Rafael Doménech, Head of Macroeconomic Analysis of BBVA Research and Miguel Cardoso, Chief Economist Spain and Portugal. Under this scenario, the country is expected to generate about 940,000 jobs over the two year period, causing the country’s unemployment rate to drop below 14%.

As we expected, the FOMC increased the Fed funds rate to 1.5%-1.75%, confirming that newly appointed Chairman is committed to maintaining continuity with his predecessor. The language in the statement underpinned the committee’s shift from a defensive to potentially offensive mindset, with strong labor market signals, increased business investment and firmer actual inflation readings.

As expected the European Central Bank (ECB) yesterday took a further step toward the normalization of its monetary policy. That is BBVA Research’s reading of the situation in its ECB Watch report. The institution headed by Mario Draghi left interest rates unchanged and will continue with its asset-purchasing program, commonly known in English as quantitative easing (QE). The main development that emerged from the policy meeting was the dropping of the “explicit reference” to the possibility of increasing the size of the program. And that already represents a change.

On January 31st, the European Banking Authority (EBA) announced the formal launch of this year’s EU-wide stress test exercise of the euro area. It also unveiled the macroeconomic scenarios under which the exercise will be carried out. The  adverse scenario implies a deviation of EU GDP from its baseline level by 8.3% in 2020, resulting in the most severe scenario to date. The EBA expects to publish the results of the exercise by 2 November 2018

Over the past three years, the asset allocation team of BBVA Asset Management has overhauled its investment process to bring as much objectivity as possible to decision-making when building a portfolio. Based on the principles of behavioral economics, the new process aims to determine how the power of the mind affects financial decisions.

Economic activity in Latin America has been invigorated in recent months, in line with the recovery of confidence among families and businesses and a more favorable external context. In its Latin America Economic Outlook for first quarter 2018, BBVA Research forecasts that the region’s growth will increase from 1.1% in 2017 to 1.7% in 2018 and 2.5% in 2019.

BBVA Research maintains its forecasts for Spain’s GDP growth in 2017 and 2018 at 3.1% and 2.5%, respectively. In addition, it expects that the economic recovery will continue in 2019  (with a 2.3% increase in GDP) and that the improvement in the economy will translate into wage growth. BBVA Research’s latest Spain Economic Outlook was presented today by Jorge Sicilia, Chief Economist of the BBVA Group and Director of BBVA Research; Rafael Doménech, Head of Macroeconomic Analysis at BBVA Research; and Miguel Cardoso, Chief Economist for Spain and Portugal.  If these forecasts prove to be correct, Spain´s unemployment rate could drop to 13.4% by end of 2019, which would imply the creation of 860,000 jobs over the next two years.

During 2017, the European Union managed to weather populist electoral bids in its member countries, and to keep the Brexit talks on track. But the year to come presents even larger challenges that will require a sustained, collective effort by EU leaders, says BBVA Executive Director José Manuel González-Páramo.

The outlook for Argentina’s economy in 2018 remains optimistic, with GDP expected to expand by nearly 3% for the second consecutive year. However, achieving sustained growth and attracting international investment will depend, not just on stable macro indicators, but on long-lasting structural reforms. While the initial signs of economic recovery became apparent in the second half of 2016, it wasn’t until mid-2017 that growth rates began to pick up across most industries.

According to BBVA Research’s latest Spain Outlook report, 2017 will cap off Spain’s three-year run of GDP growth at rates above three percent. Recovery will continue in 2018, but at a slower pace, in an environment marked by rising uncertainties. The report was presented today by Jorge Sicilia, Chief Economist of BBVA Group and Head of BBVA Research, Rafael Doménech, Head of Macroeconomic Analysis of BBVA Research and Miguel Cardoso, Chief Economist Spain and Portugal. Considering this scenario, BBVA Research has downgraded its GDP growth forecasts for 2017 and 2018 to 3.1 and 2.5%, from 3.3% and 2.8% in July.

BBVA Research has upgraded its Latin America 2017 growth forecast by 30 basic points, citing improvement in domestic demand in Mexico and Peru. The BBVA Group study service expects the region to grow 1.1% in 2017 and 1.6% in 2018.

A group of BBVA representatives, led by the Executive Chairman Francisco González, will travel this week to participate in the most important economic event of the year: The annual meeting of the International Monetary Fund (IMF) and the World Bank (WB).  This week is surely marked red on Christine Lagarde (Managing Director of the IMF) and Jim Yong Kim’s (president of the World Bank) calendars.  Representatives of the world’s top financial institutions will meet in Washington from October 9 to 15 to discuss topics such as the future of work in the wake of the Fourth Industrial Revolution or the impact of ‘fintech’ on the financial sector.  Concurrently on the same dates and city, the Institute of International Finance (IIF) will be holding its annual meeting, focusing on the future of finance.

After seven years of negotiations, the Canada-Europe Trade Agreement, CETA, has entered into force provisionally.  Under this bilateral agreement, the most ambitious signed to date by Brussels, most custom duties levied on trade flows between both countries will be scrapped.

After barreling into the state of Texas, as one of the largest and most damaging Hurricanes in U.S history, Hurricane Harvey continues to devastate the Corpus Christi-Houston-Galveston area with catastrophic destruction, human losses, and unprecedented flooding.

As the region begins to pick up the pieces in the weeks, months and years to come, there is a growing concern about the impact that Hurricane Harvey will have on the regional and national economy.

Urbanization in Latin America began to increase in the second half of the 20th Century, to reach nearly 80% of the population today. In spite of the great expansion in recent decades, BBVA Research predicts that there will be a certain moderation in this growth, until it reaches 86%.

The Pacific Alliance, made up of Chile, Colombia, Mexico and Peru, is a regional economic and comercial powerhouse.  This area grows more than the average in Latin America. BBVA Research expects GDP growth of 1.6% and 2.3% in 2017 and 2018, respectively.  “The Pacific Alliance is a success story in integration.  And not by chance.  It shares an ambition and a set of values behind this policy, on how prosperity should be reached,” said Jose Manuel González-Páramo, executive director of BBVA in Santander.

Argentina and Brazil are finally pulling out of recession and driving the economic growth in Latin America as a whole this year, despite the slowdown in other countries in the region. According to BBVA Resarch’s ‘Latin America Economic Outlook’ Q3 report, the region will grow 0.8% in 2017 and 1.7% in 2018.

The tale of the U.S. economy since the election of Donald Trump is one of great expectations but little growth.

BBVA Executive Director José Manuel González-Páramo predicts that the European Central Bank’s (ECB) monetary policy will normalize next year. He estimates that the ECB will announce a slower pace for asset purchases in the fall. “I wouldn’t be at all surprised if we saw the first interest rate hike at the end of 2018,” he said, during the Círculo de Economía meeting in Sitges.

There has been an increasing focus on sustainable finance and on the impact of the climate change for the financial stability since 2015 year. Having said that, sustainable finance and the analysis of the consequences of climate change for the financial system are still in a very nascent stage and there is still a lot of work to be done. Two leading projects that are a step in the right direction are those of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) Recommendations -at global level- and the creation of a European Expert Group on sustainable finance -in the EU.

BBVA Compass economists lay out their reasons for raising their estimate to three rate hikes in 2017 in their latest Fed Watch report, pointing to the underlying strength of the economy and a series of hawkish speeches by key Federal Open Market Committee members.

Mario Draghi did not announce any new changes in monetary policy at Thursday’s press conference, but the latest European Central Bank (ECB) meeting did lead to some updates. On the one hand, the ECB is more optimistic about economic growth. On the other, it is raising its 2017 inflation forecast to 1.7% (from 1.3% in December) due to growing energy prices, but it barely changed its core inflation projection. And last, but not least, it added some nuances to its wording, which could be the prelude to changes in its monetary policy,  BBVA Research notes in its ECB Watch report.

South America’s GDP will recover in 2017 after four years of economic slowdown, while Mexico will bear the impact of the uncertainty surrounding US policies, which is likely to hinder its growth prospects. These are the key conclusions of BBVA Research’s Latin America Outlook Q1 2017 report.

After two consecutive years of contraction, Latin America will be able to post positive growth figures in 2017, between 1.2% and 1.3%, according to projections by BBVA Research, the International Monetary Fund (IMF) and the World Bank .

As expected, the ECB left its monetary policy and interest rates untouched and did not make any significant announcements at its January meeting. Mario Draghi’s comments on inflation do deserve special attention, however.

Türkiye Garanti Bankası A.Ş. released its financial statements as of September 30, 2016. Based on the consolidated financial statements from the first nine months period of the year, the bank posted a consolidated net income of TL 3.94 billion. With a total of TL 295.13 billion in assets, Garanti contributed TL 239.26 billion to the economy through cash and non-cash lending. The bank’s Return on Average Equity (ROAE) was 16.1% for this period, while its Return on Average Assets (ROAA) was 1.8%.

BBVA Research economists say that despite U.S. GDP showing a healthy rebound in the third quarter, the die has been cast after two consecutive quarters of weak growth. They expect the GDP growth rate in 2016 to be 1.6 percent, the lowest in seven years.

Over the past eight years, we have seen markets panic on a number of occasions. Normally, there was a good reason for the sudden market crashes. Let’s take a look at the periods of greatest market volatility and analyze the central banks’ responses to reassure investors.

Over the past three decades, an economic model has gained a foothold in Chile that has proven successful at a number of levels, such as enabling high GDP growth rates (yearly average of 5.3%), helping the country to significantly bridge the income gap with developed countries such as the U.S. and Germany and improving  in the living standards of the population.

Fed members just can’t seem to make up their mind these days. One minute they are shouting out encouraging signals about the U.S. economy, and the next it is all gloom and doom. In the end, we are left with a mixed signal as to what is really going on, with the impression that Fed members themselves don’t really have any idea on how to proceed in such an uncertain economic environment.

There is broad consensus regarding the objective to expand the participation of economic agents in the financial system. Various studies have found that greater financial inclusion increases the population’s welfare, reduces the likelihood of falling into poverty, increases productivity and generates a significant positive impact on the country’s macro-economy. For all these reasons global economic policy agendas have been strongly recommending the implementation of measures to help strengthen financial inclusion in countries.

The trade finance or foreign trade activity accompanies people and businesses in their activity importing/exporting goods and services, mitigating the risks that exist in international commercial relations and simplifying the settlement of operations. The same commercial transaction can require different solutions over time, depending on the moment at which it takes place and the role of the parties involved (importer or exporter).

BBVA Research presented the latest edition of its Spain Economic Outlook report today. Economists’ forecasts for upcoming quarters remain unchanged from the forecasts that were published in the last first quarter report.

The last week of April could mark the turning point for the signing of the TTIP, the free trade partnership between the US and Europe. Several key appointments are scheduled to take place during those days, including Obama and Merkel’s face to face meeting. All these appointments will be key for the eventual signing of the treaty in 2016.

GDP expected to grow at about 2% in a scenario marked by lower oil prices and a complex international context for the country’s investments and exports. Growth in 2016 will be driven by expansions in the petrochemical industry, imports and the services and construction sectors.

Falling oil prices are pushing Colombia into a new reality. It is a reality that implies cuts in private and public spending and therefore also in short and medium term growth. This new reality can be seen through two different perspectives: the pessimistic view that relives the glory days of the past with oil prices around $100 per barrel and the optimistic view that shows us the opportunity to strengthen, find and build sources of growth for the near future. As I tend to be more of an optimist, I think that we stand before an opportunity.

The latest batch of measures comes almost exactly one year later the ECB announced the purchase of EZ government bonds (March 9th, 2015). According to BBVA Research, with last Thursday’s announcements, the ECB stressed that there is ample room for further measures, dismissing the view that everything is done in terms of easing policy.

During his address in Bilbao, during the conference organized by Elkargi SGR, BBVA Executive Director remarked that “the Spanish economy is managing to keep high growth rates despite global and local uncertainties.”  He defended the need for greater EU-wide integration and the implementation of free trade agreements – such as the TTIP which the US and EU are currently negotiating – as levers for economic stability and growth inside and outside Spain.

After the words of Mario Draghi at the January meeting, leaving the door open to expand the measures of the European Central Bank this month, these are BBVA Research forecasts for the meeting tomorrow.

Market downfalls at the beginning of the year have put investors on guard. The sharp decline in oil prices and questions over the Chinese economy leave their mark on the global economic outlook. BBVA Asset Management expects to see moderate growth in the global economy in 2016 but suggests caution when building portfolios due to increased risk. Diversification and hedging are necessary.

Latin America’s economy, taken as a whole, is set to contract 0.9% in 2016, dragged by Brazil’s recession. According to BBVA Research’s Latin America Situation report corresponding to the first quarter of 2016, the region’s economy is expected to start gaining momentum in 2017, with a growth rate of 1.9%.