Global Economic outlook
According to the OECD Economic Outlook report from September 2022, the global economic outlook has slowed down more than anticipated due to the war negative impact, the generalised tightening of monetary policy, driven by the greater-than-expected inflation targets and the China’s zero COVID-19 policy imposing lockdowns in its economy. The OECD is in favour of further policy rate increases in most of the countries to ensure that inflation pressures are reduced durably.
Main takeaways of the report:
- The world economy is slowing down more than anticipated: global growth is projected to remain subdued in the second half of 2022 leading to an annual growth of 2% before slowing further in 2023 to an annual growth of just 2.2% below the pace foreseen prior to the war.
- Inflation has become more widespread: More than half of the items in the price index show inflation above 4% in the United Kingdom, the United States and the euro area.
- Inflation will ease but will remain at high levels: OECD estimates that headline inflation will peak in the current quarter in most major economies, and to decline in the fourth quarter and throughout 2023 in most G20 countries. Even so, annual inflation in 2023 will remain well above central bank targets almost everywhere
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According to Ramón Casilda, “it is no longer just a matter of Spanish capital investing in Latin America, but also of Latin American capital using Spain as a European base,” reinforcing a more balanced transatlantic economic space.
According to José Carlos Díez, Professor of Economics at the University of Alcalá, Spanish households have access to some of the cheapest mortgages in Europe, with interest rates below both Euribor and long-term government bond yields.
According to the IEE, Spain's business tax burden exceeds the European Union average, both as a share of total tax revenues and as a percentage of GDP.
AEB, CECA and UNACC propose measures to increase banks' lending capacity by more than €2 trillion in the euro area, including over €250 billion in Spain, providing additional resources to strengthen banks and finance new investment.
According to Boston Consulting Group, regulation brought in after the GFC strengthened the financial sector’s resilience but institutionalized bias towards removing all risk over economic growth.
According to Ramón Casilda, the EU–Mercosur agreement will generate annual tariff savings of around €4 billion, which is significantly higher than the savings expected under the agreements with Canada and Japan.
Economist José Carlos Díez notes that Spain’s banking sector has an excess of deposits and sufficient liquidity to meet the credit demand of companies and households, and does so at the lowest interest rates in Europe, according to the ECB.
According to CEPS, regulatory and supervisory complexity acts as a structural constraint on integration, investment and market depth, with costs that weigh most heavily on smaller institutions, new entrants and cross-border business models.
According to the ECB, an efficient, secure and integrated payment system would strengthen the international role of the euro and deliver benefits such as lower financing costs, reduced exposure to exchange rate fluctuations and greater protection against sanctions.
According to the IEA one key debate in the EU on financial regulation simplification is whether to explicitly include competitiveness, efficiency or contribution to growth as objectives of the regulatory agencies, following the UK example.
According to IE University’s Center for the Governance of Change, deeper and more integrated financial markets would strengthen the euro’s global role. This requires, among other elements, resilient and interoperable payment systems and completing the banking union.
Partnerships between banks and private credit: The winners will be those that combine bank underwriting discipline, distribution, and customer access with private capital’s appetite for long-dated, illiquid risk, according to Oliver Wyman.