World economic projections for this third quarter

Global growth continues, but risks increase, says BBVA Research report, referring to changes in the global economy in the third quarter. This is due to political uncertainty and vulnerabilities in emerging economies, with a slight deceleration in China due to growing trade protectionism.

it will continue to maintain its growth thanks to the fiscal and stable stimulus in China, but Europe will go through moments of less expansion. We will also witness a different monetary normalization rate in Europe and the United States, mainly due to the stronger dollar and tighter global financial conditions. In addition, the possibility of a trade war brings together the biggest risks in emerging economies and in Europe.

Exactly in emerging markets where there is more financial stress, due to the rising cost of financing and protectionist threats.

In Spain, growth will remain stable, but its composition is a little less virtuous: exports of goods and investment will be affected by the headwinds, while consumption growth will remain and l & # 39; investment in construction

Monetary Policy

The expansive tone of monetary and fiscal policy will counteract the rise in the price of oil, the slowdown in the Economic and Monetary Union, the exhaustion of certain sectors or the negative impact of the economic crisis. uncertainty about economic policy, among other factors.

Regarding the forecast of interest rate increases, the trend of the US Federal Reserve (Fed) to accelerate the rate of increase this year, while the European Central Bank ( BCE) postponed until September 2019.

The strength of the dollar and the higher interest rates will trigger an adjustment in emerging markets. The most vulnerable countries are those with the largest trade deficit and the greatest need for external financing. In this sense, there will be a shift towards tighter monetary policy in emerging countries (with the exception of China), to avoid further depreciation of their currencies.

Tariffs

Tariff increases approved by the United States. they can affect, in fact, the growth of the country itself chaired by Donald Trump. The effect, lower in Europe, would be different depending on the country and would affect mostly Germany and Eastern countries. According to BBVA Research, global GDP growth could be reduced by just 0.2 pp for the commercial channel.

Oil

Analysts estimate an upward revision of the price of oil and inflation. The increase responds to a reduction in supply. The price will remain relatively stable in 2018 and 2019.

Inflation will be higher in the euro zone, although under the target, while underlying inflation will gradually increase from very low levels .

the impact will be less, but inflation will remain above the target in 2018-19

Risk aversion

Investor sentiment has gone from a catch regime of risk (and even of some complacency) to another risk aversion. The change causes a rotation of flows between badets: from emerging markets to developed markets, and fixed income variables. In this sense, trade tensions can lead to a flight to better investment alternatives.