Nonetheless, the available information indicates that the profile of smoothly moderating activity apparent since the second quarter continued in the third quarter, and this pattern can be expected to persist throughout the rest of the year, with scant deviations from the forecasts published by the Bank on 30 March (3.7% for 2007). This slight slowdown is based on domestic demand and, more specifically, on the consumption and residential investment components, while the contribution of net external demand to growth in the first half of 2007 improved further. The slowdown in GDP seems to point to a gradual shift to a growth rate of around 3% in 2008 as a result of some rebalancing of the domestic and external sectors. However, the shocks affecting the international financial markets since August have also increased uncertainty over the forecasts for the Spanish economy and have possibly heightened the downside risks. Allow me to spell out some of the factors behind this scenario of a smooth slowdown, compatible with continued highly dynamic activity and employment. BIS Review 130/2007  3  First, the change in monetary and financial conditions will foreseeably ease the adjustment to a more sustainable pace of private-sector spending and indebtedness. This adjustment started some time back and is proceeding smoothly.
Miguel Fernández Ordóñez: Recent developments in the Spanish economy Testimony of Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Parliamentary Budget Committee, Madrid, 9 October 2007. *  *  *  Ladies and gentlemen, My appearance before this Committee as part of the Parliamentary discussion of the State budget for 2008 comes at a time when shocks are still reverberating through some of the major international financial markets, and the attendant uncertainty inevitably bears on the analysis of the economic situation. In my appearance before the Parliamentary Committee on Financial Affairs on 17 September, I examined in detail the origin and the main implications for ECB monetary policy and for the Spanish economy of these shocks, which emerged last summer against a background of marked momentum of the economy and of world trade. A significant part of this dynamism – reflected in growth rates above 5% for world output and above 6% for trade – derives from the sound performance of the emerging economies in recent years; indeed, they seem to have been less affected by the shocks than the more developed Western economies. This is, in fact, a significant feature of the present bout of turbulence which, if I may briefly recall, originated in a financial market of a developed country (the US sub-prime mortgage market).