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The year gets off to a slower start in the US and China than expected. But there is no reason to be pessimistic: the weakness is due to temporary factors in the US while China's growth is occurring within a slowdown desired by the government (which also has considerable margin for economic policy to steer this soft landing). Other key economies such as Japan and the euro area also recorded greater dynamism than expected and may partly offset the slower trend in the US and China. Lastly we should also note that Russia and Brazil, two of the emerging economies causing most concern, have posted mixed results: GDP fell clearly in both countries in 2015 Q1
but less than had been forecast. So what is the overall interpretation of this disparate economic trend? The global growth we expect for 2015, namely 3.3%, is only marginally less than what was being predicted a month ago and, should it come about, will approach the average figure posted between 1980 and 2014.

Europe continues to gain traction. GDP grew by 0.4% quarter-on-quarter in 2015 Q1, 0.1 pps more than in the previous quarter. In addition to the figures, also favourable is the rise in the number of countries posting acceptable growth: Spain grew strongly, France provided a positive surprise, Germany recorded a reasonable rate and a composition that augurs good future results, and Italy came out of its long recession. Available indicators point to a similar tone in Q2 which tends to confirm the positive scenarios proposed by analysts and international institutions for the euro area and which have generally been revised upwards over the last few months. In May it was the turn of the European Commission, increasing its previous forecasts due to the beneficial effect provided by several temporary factors such as cheaper oil, the euro's depreciation and the quantitative easing of the European Central Bank (ECB). Its current scenario predicts 1.5% growth in 2015 and 1.9% in 2016. Given the good macroeconomic developments, the main focus of attention has been on trends in the financial markets.

Upswing in volatility in Europe's financial markets. After a first quarter with European stock markets making clear gains and rock-bottom yields on public debt (two developments that can be linked to the expectations generated by the ECB's quantitative easing), both trends reversed slightly in April. The sudden rise in European public debt yields was particularly intense, occurring between the end of April and mid-May. It is not easy to interpret this episode as several different factors have played a part. The most important ones are bond prices reflecting the euro area's higher inflation and growth, the adjustment in investor exposure to European bonds and growing uncertainty regarding the outcome of negotiations between Europe and Greece. Although the situation stabilised during the second half of May, partly because of the ECB intensifying its public debt purchase programme, this volatility may continue over the coming quarters.

Remarkable economic outlook in the short term for the Spanish economy. The high rate of growth in Spain's economy is being confirmed as the year progresses. Data for Q1 from the National Accounts system record 0.9% growth quarter-on-quarter (higher than the already dynamic figure of 0.7% in Q4) and available indicators for Q2 point to this rate continuing at similar levels. As has been the case since the end of 2013, this growth is largely due to domestic demand. As a result of a recovery that is now starting to be prolonged (the first signs of an upturn were in 2013 Q3), the rate of growth in employment is accelerating appreciably: 127,000 jobs (full-time equivalent) were created in Q1, representing an increase of 2.8% year-on-year. This notable domestic dynamism is starting to be reflected in inflation as well, albeit very gradually: in May inflation stood at –0.2%, 0.4 pps higher than April's figure, so that inflation has been rising for four months now. However, in spite of the positive trend overall the Spanish economy still needs to carry out structural adjustments to ensure solid growth in the long term. In fact the European Commission has reminded the country, in its recent report with recommendations regarding the stability programme, the importance of ensuring a long-lasting correction of the public deficit and the implementation of further structural reforms.

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