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BBVA Research | Geo-World: Conflict & Social Unrest

BBVA Research | Geo-World: Conflict & Social Unrest

BBVA Research has raised its forecast for Spain's GDP growth to 2.4 percent in 2023, up from its previous forecast of 1.6 percent in March. According to the latest ’Spain Economic Outlook’ paper published on Tuesday, this improvement is explained partly by revisions made by the Spanish statistics office, INE, but also by a surprisingly positive performance in exports, which offsets for slack internal demand. However, the BBVA research unit has lowered its growth forecast for 2024 from 2.6 percent to 2.1 percent, as uncertainty is expected to worsen across the world economy next year.

BBVA Research has revised upward its estimate of Spanish GDP growth for 2022 to 4.4 percent (from the 4.1 percent forecast three months ago), although its outlook has deteriorated for 2023, when growth is expected to reach just 1 percent (from the previous 1.8 percent). This is according to the latest 'Situación España' report, presented today by Jorge Sicilia, Director of BBVA Research and BBVA's Chief Economist; Rafael Doménech, Head of Economic Analysis; and Miguel Cardoso, Chief Economist for Spain.

BBVA's research unit revises its Spanish GDP growth forecasts for 2023 downward from 3.3% to 1.8% but keeps its estimate for 2022 unchanged at 4.1%. This reflects the scarcity of some raw materials and rising commodity prices generally, with the consequent increase in production costs already feeding through to inflation. In addition, the financial burden on businesses and families is expected to become heavier as the European Central Bank (ECB) moves forward with the withdrawal of quantitative easing. These trends are analyzed and discussed in the latest ‘Spain Economic Outlook’ report, presented by Jorge Sicilia, Director of BBVA Research and BBVA's Chief Economist, Rafael Doménech, Head of Economic Analysis, and Miguel Cardoso, Chief Economist for Spain.

The report 'Impact of COVID-19 on Consumption in Real Time and High Frequency´ in Spain, published by BBVA Research, reflects a 28 percent increase in card purchases  compared to June 2019 levels. Transactions grew by 19 percent y-o-y through face-to-face channels and 69 percent in non-face-to-face channels. The increase in mobility saw a boost in spending, especially in consumer sectors such as hospitality and leisure, and in those that involve travel, such as transport.

Consumption continued growing at strong rates in June, despite the correction of most of the base effect in year-on-year terms. Mobility-dependent sectors continued recovering unevenly on a per country basis, but rates remained particularly strong in the restaurant and catering industry. This are some of the key takeaways of 'The COVID-19 Impact on Consumption in Real Time and High Definition', a report published by BBVA Research.

Carlos Torres Vila today opened the 38th APIE Seminar in Santander together with Nadia Calviño, Second Vice-President of the Government and Minister of Economic Affairs and Digital Transformation. During his speech, the BBVA Chairman highlighted that, after a weak and uncertain start in 2021, the outlook for growth is now very positive. "We all expect a strong rebound in the economy in the second half of the year," he said. In his opinion, the economic recovery and the arrival of European funds put Spain in an excellent position to face the challenges of the productive model transformation. "We must take advantage of this new period of growth to transform our economy and that means preparing ourselves for a world that is undergoing radical change, preparing ourselves to face the challenges associated with that change, and to capitalize on the unparalleled opportunities that are opening up on the horizon," he stated.

This year, Davos is resuming its normal location and dates, following several years that were impacted by the pandemic. The event organized by the World Economic Forum will once again be held in person in Switzerland, between January 16th - 20th, 2023. With the slogan, “Cooperation in a fragmented world,” the forum will bring together over 2,700 from governments, businesses and civil society representing a record number of attendance at a crucial moment for the world. Davos 2023 serves as a key platform to promote forward-looking solutions and address the most pressing global challenges through public-private cooperation.

The BBVA Chairman kicked off MoneyFest, this year’s virtual edition of Money2020. In an interview with Spriha Srivastava, Executive Editor overseeing the London Newsroom of Business Insider, he shared his insights into the trends that the pandemic has accelerated, such as digitization and sustainability. Carlos Torres Vila considers that this crisis can be an “opportunity to reset our world.” In this sense, he noted that the “infusion of public funds must contribute to achieve a more digital, sustainable and inclusive society.”

Spain’s GDP could contract 11.5 percent in 2020 and grow seven percent in 2021, according to the latest ‘Spain Economic Outlook’ report, which was presented this Tuesday by Jorge Sicilia, Chief Economist at BBVA Group and Director of BBVA Research; Rafael Doménech, BBVA Research Head of Economic Analysis; and Miguel Cardoso, BBVA Research's Chief Economist for Spain. The contraction that is expected in 2020 represents a downgrade from the previous report’s forecast, which estimated an eight percent drop in GDP this year. The downward revision is mainly due to the fact that lockdown measures were in place longer than anticipated and these restrictions had a greater impact on demand, like in other European countries. Still, the reduction in number of COVID-19 infections and the easing of restrictions has led to a strong recovery. The ambitious policy announcements in Europe and a significant fiscal stimulus in Spain reinforces the expectation that this trend will continue. Even so, the risks continue to tilt to the downside in a climate of continued heightened uncertainty.

According to last week's data on credit and debit card spending, consumption has recovered in regions where pandemic restrictions have been lifted. This improvement is observed in the U.S., Turkey and Spain, and in recent days in Latin America. In Spain, increased spending has been seen in those regions that first moved into phase two of the country's reopening. BBVA Research points out that there was also an increase in ATM cash withdrawals.

BBVA Group executive chairman Carlos Torres Vila and BBVA CEO Onur Genç participated in a virtual Live@BBVA event with more than 65,000 connections from employees. They provided answers to questions about how BBVA is dealing with the coronavirus crisis and sent a message of hope. “Together we can ensure that the recovery is stronger,” the chairman said. “It is time to step up and make a difference,” and to do so, “ "it is essential that we all - authorities, companies and society a whole - act in a coordinated manner."

The spread of coronavirus to several countries has led to a very charged reaction in the markets. The World Health Organization’s declaration of a global COVID-19 pandemic led to a number of immediate actions from the central banks and, concretely, the European Central Bank (ECB), as well as governments and other authorities in Europe. In a note, BBVA Research indicates that “the adoption of these measures is positive.” However, it feels that the monetary policy measures should be accompanied by a coordinated fiscal response from the European Union, which has already begun to materialize in Europe with similar stimulus plans between different countries.

BBVA today released its 2019 annual compensation report for its board members, the first that includes sustainability as a non-financial indicator in the variable compensation for the executive chairman. In 2020, the CEO will also have an indicator that will measure the bank’s strategic commitment to climate change and sustainable development. The 2019 compensation policy (applicable for 2019, 2020 and 2021) was already announced last year. It was approved with 94.8 percent of the votes at the Annual General Meeting in March last year.

The B20 - or “G20 for businesses” - is a forum of private international companies that provides recommendations to the G20 to address the most relevant challenges of the global economic and financial agenda. This year, Saudi Arabia will preside over the meeting. BBVA has played a very active role in the B20 since 2015, thanks to BBVA Executive Board Member José Manuel González-Páramo, who serves as Vice Chair of the Finance and Infrastructure Task Force.

According to BBVA Research’s latest Country Risk Quarterly Report, financial tensions have eased across all regions, markets, and asset classes with the exception of Latin America. Emerging Asia is the only region where all variables for the macroeconomic vulnerability radar analysis stand below their corresponding risk thresholds. Between 2018 and 2019 there were no significant changes to the degree of macroeconomic vulnerability across all developed economies, whereas within emerging regions, changes were concentrated in Latin America.