The situation in the United States, where the economy is in a cyclically more advanced position and employment levels are close to their structural low, is conducive to the Federal Reserve normalising monetary policy. However, the absence of inflationary pressure, the downturn in and uncertainty over the global economy, and doubts about when interest rates will begin to rise all cast a shadow which has prompted very mixed expectations. As for developments in emerging economies, the slowdown in China, sharp adjustments to its share prices and the depreciation of its currency during the summer have heightened the risks of a steeper-than-expected fall in activity, with effects on the global economy through trade and commodity prices and via indirect contagion effects owing to higher risk aversion in international financial markets. The main issue regarding the Chinese economy is not whether it slows by a fraction of a percentage point more than projected, but rather the external consequences of such a development. For example, a slowdown in growth to around 6% of GDP, compared with 7.3% in 2014, is no grave cause for concern. In principle, these figures, which largely reflect the change in China’s production model to an economy more geared towards consumption, can be managed by the authorities. The uncertainty lies in the difficulty of evaluating the external effects of such changes, and the fact that the differing forecasts of private and public agents are reflected in greater volatility in financial markets.
Asian and Latin American emerging economies are particularly sensitive to changes in the international arena. In Latin America, GDP data for the second quarter show a significant slowdown. The Brazilian economy, in particular, is worrying given its high budget deficit and significant current account shortfall (although the latter has begun to be corrected), along with inflation that needs to be contained and corrected as soon as possible. The IMF projects Brazilian GDP will fall by 3% this year and will fall further, albeit moderately, in 2016. I would like to indicate that the impact of the downturn in the emerging economies on Spanish banks, even for those with significant exposure to some of these economies, has been moderate. The geographical diversification of their businesses and the adjustments made to their management have contributed to the stability of their balance sheets. Developments in the euro area As for economic developments in the euro area, growth in the second quarter was external demand-led, although internal demand continues clearly to support disposable income arising from lax monetary policy, the neutral fiscal policy stance, low energy prices and the improvement in the labour market. 2  BIS central bankers’ speeches  In September, the ECB revised downwards its growth projections for the euro area to 1.4% in 2015, 1.7% in 2016 and 1.8% in 2017. It should also be noted that the approval and start-up of the Third Bailout Programme for Greece has mitigated the risks in the area, a source of uncertainty for the Spanish and other European economies.