Indeed, the latest information shows that economic activity is expected to have continued worsening in recent months. This is evident in the manufacturing Purchasing Managers’ Index (PMI), which has since the start of the year stood below 50, a level indicative of a contraction in activity. The reduction in the last few months in the global service sector PMI, which had held firmer to date, in expansionary territory, suggests an increased risk of a greater slowdown in global activity. This downturn in activity has also been accompanied by more marked divergences across geographical areas. Among the advanced economies, activity has remained relatively robust in the United States, underpinned by the fiscal expansion and the soundness of private demand. However, the gradual tailing off of the effects on activity of tax cuts, the signs of a global slowdown and the absence of clear inflationary signals have already prompted a shift in the Federal Reserve’s monetary policy. This has taken the form of the announced conclusion of the balance sheet reduction process as from September and, last July, the first interest rate cut since 2008. Moreover, the financial markets anticipate further cuts in rates in the rest of 2019 and in 2020. In other geographical areas, GDP growth has been increasingly weak. This has been the case in the European economy, to which I will refer later.
3 See Box 1, “An estimation of the impact of the recent protectionist measures”, in the “Quarterly report on the Spanish economy”, Economic Bulletin, 2/2018, Banco de España; Box 1, “Implications of rising trade tensions for the global economy”, in Economic Bulletin, 3/2018, ECB; and International Monetary Fund (2018), “Scenario Box 1. Global Trade Tensions”, World Economic Outlook: Challenges to Steady Growth, October, pp. 33-35. 4 See IMF (2018), “Euro Area Policies: Selected Issues”, and J. L. Vega (coord.) (2019), “Brexit: current situation and outlook”, Occasional Papers, no 1905, Banco de España. 5/16  Among the European countries, Germany’s industry and export-based growth model has been greatly affected by external developments. But Italy has been the most beleaguered, given its weak GDP growth, the result of the uncertainty over the course of its economic policy. Indeed, the latest available information generally points to a slowdown in the growth rate across the euro area, concentrated especially in the industrial sectors. Moreover, the weakness of the external sector is also spreading to investment. That means the sluggishness of external demand, heightened political uncertainty in some countries and the easing in corporate profits are already bearing down on firms’ spending plans. Furthermore, the leading indicators of euro area exports show no signs of having touched bottom. The flash estimate for euro area GDP in the second quarter shows quarter-on-quarter growth of 0.2% (compared with 0.4% in the first quarter), with negative growth of 0.1% in Germany and stagnation in Italy.