Favourable winds for a good 2015

Cheap oil and fewer macroeconomic imbalances, two tailwinds that are supporting the global recovery. World growth is continuing to speed up in the final part of 2014. According to national accounts data, almost all leading economies have posted growth figures in Q3 that are better or at least the same as the figures posted for the preceding quarter. It is true that the rate of this growth is notably disparate, ranging from the US's strong 1% quarter-on-quarter to Japan's disappointing –0.4% and with a meagre 0.2% for the euro area. The first few indicators for Q4 are also pointing in the same direction: activity is on the up. This should allow 2014 to end with global growth averaging 3.3%, similar to the figure for 2012, and to cement a more appreciable change in trend as 2015 advances, the year for which we forecast 3.9% growth. This course is being propelled by two big tailwinds; the need to carry out fewer adjustments due to the reduction in macroeconomic imbalances and the low price of oil (although the latter is actually a headwind for oil exporters). This last factor is crucial to keeping inflation in check, in turn helping the recovery to consolidate since the expansionary policies implemented by a large number of central banks can continue.

The United States is consolidating its recovery while China is engineering a gradual slowdown. The world's two largest economies are continuing along the paths plotted in previous months, with their eyes on the growth in activity although, as 2014 has advanced, some trends have come to light that are going to be important in 2015. In the case of the US, the Federal Reserve called a halt to its quantitative easing thanks to the good tone of indicators for business and the labour market. Although the market continues to assume that the Fed will not raise its reference rate until mid-2015, discussion in the US is now starting to take on the tone of more mature phases in the cycle. For example, the Fed's minutes are starting to reflect the concern of some members regarding the expected trend in inflation. The focus is also shifting in China. Its good growth figures for Q3 (up by 7.3% year-on-year) have shelved fears of a «hard landing» and helped the government to start conveying the message that growth of around 7% for 2015 would be acceptable. Nonetheless, and to stop activity from sliding too quickly towards this new, relatively low rate of growth, the Chinese central bank decided to cut its official interest rate to 5.6%, an unexpected move and highly revealing after two years without any change.

A slow recovery for growth in the euro area. The growth figures for Q3 (0.2% compared with 0.1% previously, in quarter-on-quarter terms) have allayed the risk of a third recession but have also confirmed a relatively unattractive scenario: the euro area is recovering but at a slow pace and with significant differences between countries. While Spain is performing relatively well, Italy has disappointed again. Given this situation of a minimal recovery, inflation remains at a low level. Nonetheless, our forecasts point to a gradual improvement in tone for activity (and, in turn, inflation) in 2015, when the euro area should benefit more substantially from the increase in international trade (already reflected in the euro area's exports as a whole) and the gradual recovery in credit, boosted by the ECB's expansionary measures which should bring its balance sheet up to the size achieved in 2012.

The Spanish economy stands out within the European context. In 2015 Spain is on track to enjoy its best economic growth since 2007 (according to our forecasts, next year's GDP will grow by 1.9%). The national accounts figures for Q3 confirm that the economy grew by 0.5%, repeating the healthy tone of Q2, and we expect activity to continue increasing over the coming months, albeit at a slightly slower rate. As is happening with the rest of the euro area, the drop in oil prices and improved exports (Spain is noticeably benefitting from the euro's depreciation) will be essential to cement the recovery. Spain may also enjoy some support from moderate fiscal relaxation (the European Commission has warned that the country may not achieve its public deficit target for 2015 but, unlike France and Italy, it will not re-examine the situation in March). To complete the positive outlook, its competitiveness and the signs of stabilisation shown by the real estate market should also support its recovery. Nonetheless, particular attention will have to be paid to ensure that low inflation does not become entrenched, a situation which, in turn, will depend to quite a large extent on the euro area actually recovering as expected.