In the international sphere, as I have already mentioned, some of the elements which have already adversely affected activity in recent quarters may have even more unfavourable effects in the future. Such is the case, for example, of the possible adoption BANCO DE ESPAÑA  6	 TESTIMONY BY THE GOVERNOR OF THE BANCO DE ESPAÑA BEFORE PARLIAMENT IN RELATION TO THE DRAFT STATE AND SOCIAL SECURITY BUDGET FOR 2019  THE MACROECONOMIC PROJECTIONS FOR THE DRAFT BUDGET  CHART 7  GENERAL GOVERMENT BUDGETARY BALANCE  REAL GDP Rate of change (%)  % of GDP  4  0  3  -1  2  -2  -1.3 -2.1 -2.4  1  -3  0  -4 2017  2018  2019 STATE BUDGET 2019  2017  BANCO DE ESPAÑA (DECEMBER 2018)  2018  2019  CONSENSUS FORECAST  SOURCES: Consensus Forecasts, IGAE, INE, State Budget 2019 and Banco de España  of additional protectionist measures by some countries and of the potential responses to them by other economies. Nor can we rule out fresh tensions linked to the changes in US monetary policy, particularly in those economies with a high dollar-denominated debt and, in general, in the international financial markets. Also, the final terms of the UK’s exit from the EU continue to be highly uncertain, with possible adverse effects on the euro area (see right-hand panel of Chart 5), where, moreover, uncertainty regarding the fiscal policy of certain countries persists.
Our institutions have successfully tackled the COVID-19 crisis thanks to a combination of suitable risk management and the set of extraordinary measures approved by the public sector (governments, prudential regulators and supervisors). I am confident that they are well prepared to deal with these new tensions and turbulence. In conclusion, the economic situation remains highly uncertain, in particular due to the ongoing war in Ukraine, the implied tensions in food and energy markets, the sanctions enacted against Russia, and the risks surrounding the continuation of energy trade with the latter. The economic effects of this situation can now clearly be seen for the economy as a whole and, in particular, for the more vulnerable citizens. With all of the uncertainty that surrounds any projection in these changing circumstances, while we foresee a significant deceleration of the economy and high inflation in the very short-run, we also expect the economic situation to normalise thereafter, with inflation easing over 2023, once all of the factors I referred to earlier have returned to normal. Fiscal policy has a key role to play, provided it targets the households and economic sectors hardest hit by the crisis, as also recently stressed by the European Commission, given the limited room for manoeuvre in public budgets. An appropriate combination of policies would support economic normalization and help tackle the inflationary episode, as would the continuation of prudent approaches by wage- and price-setters. Monetary policy can certainly meet the challenge.