- Our BBVA-GAIN model points to a slight growth moderation, towards quarterly rates slightly below 1% in 2H18, in line with our projections of 3.8% for 2018.
- Manufacturing activity has lost momentum, partly expected after an unsustainable strong performance at the end of last year, but the impact of increasing protectionism could be weighing on confidence, global trade and investment. In addition, a more moderate growth in households expenditure seems to be taking root.
- Increasing differences in economic performance by region. The US domestic demand keeps fuelled by stimulus and strong job creation, while the ongoing Fed normalization, together with idiosyncratic shocks in some countries, have triggered a reassessment of risks and increasing financial tensions in emerging economies. In China and the EZ, growth seems to remain steady and still resilient to mounting uncertainty.
- Rising inflation has moderated in recent months across the board, reflecting the performance of commodity prices. Core inflation remains contained in most areas, but it is expected to increase gradually due to diminishing spare capacity in advanced economies and to the passthrough effect from currency depreciation in emerging economies.
- Risks are tilted to the downside and are mainly related to political uncertainty, vulnerabilities in emerging economies and, above all, increasing protectionism (despite some recent relief on NAFTA and US-EU trade relations).
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