The turbulence was initially transmitted to other international financial markets through sharp corrections in the credit quality of certain complex structured financial products which, at least apparently, were relatively concentrated in the financial systems of a number of developed economies. The Spanish economy is not one of them. Although I will pass quickly over this point, which I addressed in depth in my recent appearances before Congress and the Senate, I do wish to remind you of the safety buffer afforded by the Spanish financial system’s non-exposure to practices and products of this type and by the soundness of our credit institutions in terms of profitability, solvency and ample provisions. In the economies most directly affected, credit institutions active in originating and distributing these complex structured products have prompted tensions in the interbank markets in which the liquidity provided by central banks to the financial system is redistributed. The rapid response of the central banks, led by the US Federal Reserve and the European Central Bank, prevented these tensions from acting as a channel through which the instability was further amplified. We must acknowledge, however, that there are still uncertainties hindering the normalisation of these markets and that dissipating them will require an additional effort by institutions to increase the transparency of their operations. The euro area stands ready to face these shocks from a solid position and, therefore, with significant resilience.
Second, the progressive normalisation of the real estate market, against a background in which the demographic factor and the buoyancy of employment are lending greater support to housing demand than in previous property cycles, would limit the effect of slower house price rises on consumption and soften the impact of the cyclical change on residential investment. At the same time, the step-up in private- and public-sector investment in recent years has raised the level of capitalisation of the economy following a prolonged period of intense job creation, and this should manifest itself in higher long-term potential growth. Although it is unlikely that the expansion of business investment and non-residential investment in construction will maintain the pace of recent quarters, the growth outlook for both spending components is, at first sight, favourable. In any event, it seems unlikely that productive investment alone can offset the lower contribution from household spending. Hence, as I pointed out in my previous testimony, the role of net external demand will be fundamental in making some containment of spending compatible with a continued growth rate of around 3%. As we have seen in the last few years, the contribution of this variable to growth depends very much on the performance of Spain’s export markets, but also on the competitiveness of Spanish production.