This has been achieved by sales of large nonperforming and foreclosed asset portfolios, partly as a consequence of regulatory and supervisory pressure. These latest developments have occurred in a favourable macro-financial setting characterised by growing economic activity, falling unemployment and lower interest rates. This has boosted borrowers’ ability to repay their loans, driven up asset values and has also been compatible with substantial deleveraging in the non-financial private sector and with a major consolidation process in the banking sector. 7/13  Spanish banking system earnings are highly cyclical, essentially on account of business in Spain. Banks that are more exposed to business abroad were comparatively less hard hit by the crisis, as they were able to offset the losses on their Spanish business with earnings from their activities in other economies that were less adversely affected by cyclical patterns. Naturally, these international exposures also entail other risks. For example, banks with exposure to the United Kingdom could be affected by the possible negative impact of Brexit and the effects it may have on the UK economy. In addition, the problems facing certain emerging market economies, such as Turkey or Argentina, may affect banks that have exposure to those countries. However, despite these risks, international diversification of the banking business offers important advantages overall and especially, as was apparent in the last crisis, when it is focused on retail banking and is organised on a decentralised basis.
The natural resources sector reduced its annual growth rate by more than two points compared with the previous quarter, primarily related to lower mine production early in the quarter, but also to the significant drop in fishery. Sectors other than natural resources performed below trend in the second quarter. Growth was mainly driven by trade and construction, while other areas linked to investment slowed. Installed capacity utilization has declined accordingly. Domestic demand slowed down further in the second quarter. Final demand, however, which excludes inventories, continued to grow at the same pace of the first quarter. Gross fixed capital formation posted y-o-y expansion flat from the first quarter of this year, but below the figures of the second half of 2012. As has been noted before, this slowdown owes mainly to the maturing of mining investments after three years largely outperforming GDP. Also in an external context where the copper price has dropped and moderating expectations for growth around the world but especially in China, which call for more caution when evaluating investment decisions. On the other hand, private consumption was more dynamic, especially in its non-durable component, while durables remained high. Labor market conditions have continued to tighten, but are still the main driver of this component. Nominal and real wages have moderated their annual variation, while the unemployment rate remains near all-time lows. Again, unlike previous cycles, credit growth has accompanied private income, but has not been the main determinant of household spending.