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The global recovery has advanced to some extent at the start of 2015 but downside risks have also increased. The latest data available point to 2014 ending with a relatively widespread trend of higher growth. This is a good foundation for 2015 to provide us with even more noticeable expansion, which would bring world growth for the year we have just started to 3.9% (3.2% in 2014). But some downside risks have emerged together with this underlying positive trend. Firstly, entrenched geopolitical risks are clearly creating uncertainty and ultimately financial volatility. For example, the complicated poker game between oil producers has ended up pushing crude oil prices down to levels that, should they continue, could start to destabilise some economies. Moreover, in the same geo-strategic area it has been confirmed that the entrenchment of conflictive fronts is finally eroding not only the parties involved but also a wider environment. Russia would be a case in point for both risks, with the country teetering on the verge of a potentially severe recession.

The United States and China now face the challenge of handling a more mature cycle. These countries share two important aspects at a global level: both are fundamental in terms of their contribution to world growth and both are now starting to tackle aspects typical of more mature phases of the cycle. In the US, the most recent data point to the economy entering a clearer phase of expansion. Given the absence of any appreciable inflationary tensions, the Federal Reserve has no need to hurry its monetary normalisation and is attempting to prepare economic agents for a different financial scenario via its forward guidance. Such an effort is crucial as each positive macroeconomic figure in the US has had a knock-on effect in the form of foreign exchange weakness in economies such as Mexico and Colombia, a reminder of just how closely the market is watching in this new monetary phase. Meanwhile China is attempting to actively manage its economy as it enters a phase of relatively low growth. Indicators suggest that the slowdown is gradual and it is reassuring to think that the country also has considerable room for manoeuvre in terms of its fiscal and monetary policy. Nonetheless, it is critical for this process to be gentle since, otherwise, the anxiety seen in the summer of 2014 regarding a hypothetical hard landing for China could be repeated.

The recovery is continuing in the euro area but slowly and with differences between countries. Any analysis of the underlying trends in the current situation faced by the euro area must necessarily make a wealth of fine distinctions. On the one hand, it is clear that economic activity is increasing. Figures from the final part of the year confirm that the euro area is moving away from the stagnation seen in the summer. Moreover, the factors that are driving this recovery look like continuing: private consumption, the component of domestic demand with the greatest inertia, is picking up and the effects of the euro's depreciation and falling oil prices will have considerable impact in 2015. However, the rest of the panorama is less encouraging. In Europe, the political risks mentioned above are crystallizing in the political uncertainty in Greece. But it is not just the political front that causes concern: the economy is not entirely free from risk either, affected by a recovery that is too slow and unevenly spread among countries. Lastly, the threat that this current situation of low inflation might become a deflationary phase has not diminished. Given this situation, and given the modest success of its long-term liquidity auctions, the ECB is very likely to start a large-scale programme of public debt purchases during the first quarter. This new monetary expansion will be accompanied by the so-called Juncker plan which attempts to improve private investment in the EU via public guarantees. In short, extraordinary measures are being taken in Europe to allay equally extraordinary risks.

The other, more positive side of the coin for growth - Spain. In spite of this uncertain situation, our economy is enjoying favourable growth. The latest data confirm that domestic demand speeded up in the last part of 2014, fundamentally as a result of improved confidence regarding growth prospects. In the short term, this factor makes our cycle somewhat independent from the more contained cycle of the euro area. However, in terms of inflation, prices are still falling in Spain (–0.4% year-on-year in November). Although this disturbing figure is largely because of the drop in oil prices, even after discounting the volatile components of energy and fresh foods inflation still has not risen since last May. However, our forecasts point to core inflation abandoning this zone of zero growth as from the beginning of 2015 (general inflation will follow suit later on). In short, Spain seems to be prepared to tackle this stage of higher global uncertainty from the end of 2014 relatively well. But it would be even better if some of the world's riskier injuries could be healed quickly.

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