As in other countries, the outlook for the Spanish economy remains uncertain, although this has abated somewhat recently in light of the brighter figures for the world economy. It is likely that the recovery in the Spanish economy will lag that in the euro area to some extent. This is due above all to the marked weakness of investment, not only in the case of housing, but also in that of business investment, given the very low levels of capacity utilisation. While public investment will continue to account for a high proportion of GDP in 2010, this figure will be lower than in 2009. The outlook for private consumption is more uncertain. The main determinants of consumption will not be favourable, given the foreseeable behaviour of employment and the difficulty of reversing the high unemployment rate. Yet as the decline in households’ consumption has been much more drastic than that of their incomes, the saving rate is climbing to very high and indeed unprecedented levels. Hence, if the factors of uncertainty were to abate, consumption might contribute more significantly to the recovery. Given these constraints, the main support factor of activity in 2010 has to be the external sector. This will be assisted by the earlier recovery of our main trading partners and the relatively favourable course that Spanish exports are following.
The euro area has also shown some improvement recently, with positive growth rates in some countries as early as in the second quarter. The latest figures suggest that economic activity may be expected to show positive growth rates across the area in the third quarter. That said, the upcoming recovery will be slow, meaning that quite some time will elapse before pre-crisis output levels are restored. BIS Review 151/2009  1  Public finances have worsened considerably in the euro area owing both to the operation of the automatic stabilisers, which have responded to the cyclical downturn, and to the discretionary measures adopted to boost demand and the action taken to support the financial system. The financial crisis and the decline in activity have severely affected some European credit institutions, which have come to depend largely on public-sector support and which are immersed in a process of adjustment that may have repercussions for their ability to effectively channel funds in the future. On the inflation front, we have continued to witness year-on-year declines in consumer prices in the euro area, due above all to notably lower oil prices than a year ago. Most forecasts suggest positive inflation rates will resume in the area in the coming months, as the comparison effects with the levels reached by commodity prices twelve months back cease to apply.