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The advanced economies have continued to grow in spite of financial turmoil. Developments in the economic situation in July and August tended to be in line with expectations for most advanced countries although this was not the case of the emerging economies. The doubts affecting the biggest of these, namely China, are precisely one of the factors underlying recent episodes of volatility in financial markets. The publication of activity indicators that confirm the Chinese economy has slowed down more than predicted has led the country's authorities to devalue the yuan but, far from having a calming effect on investors, this decision has further fuelled their concerns regarding the actual state of the economy, in turn leading to several volatile episodes that have affected the stock markets, emerging currencies and commodities. The outcome of these episodes has been a relatively widespread correction in risk assets. For example, in August the US stock market was down by 6.3% and the Eurostoxx 50, by 9.2%, although these drops were smaller than the corrections seen in the Shanghai stock exchange (–12.5%) and oil prices (–14.9%). The fact that Russia and Brazil's recessions have worsened has amplified mistrust towards emerging economies in general.

With all eyes on the Federal Reserve, the US is growing without too much pressure on prices. The strictly macroeconomic situation has developed along well-known lines: after an unusually weak Q1, GDP grew by a considerable 0.9% quarter-on-quarter in Q2 thanks to dynamic performances by consumption and exports. Activity figures also suggest the start of Q3 has been expansionary. The US recovery is consolidating without any appreciable tension in the CPI (even growth in wages is contained at present in spite of a strong rise in job creation in the last few months). Given this situation, the main uncertainty in the short term comes from when the Federal Reserve will actually start to raise its reference rate. The Fed could be sensitive to global financial volatility although the robustness of the recovery would justify the start of interest rate normalisation. With regard to Japan, although GDP was lower than expected in Q2 due to weak consumption and falling exports because of lower demand from China, the upward revision for Q1's figure and the trend observed in the latest indicators point to higher growth in the second half of the year.

The main source of uncertainty in Europe, namely Greece, has been contained but not eliminated. Growth in the euro area's economy is firming up, as expected. There was slightly less growth in Q2 than in Q1 but indicators from July and August point to the expansion consolidating. After the first six months of 2015 the recovery seems to have reached all countries in the euro area (with the notable exception of Greece), albeit with large differences in terms of intensity, given the vitality of Germany and Spain compared with the more tepid growth seen in France and Italy. With regard to Greece, the third financial assistance programme has been approved, totalling 86 billion euros (equivalent to 48% of GDP). This programme contains demanding structural reforms (privatisations and fiscal, labour and pension reform) and its implementation will be closely supervised. As the country's debt has not been restructured (leading to the IMF not participating in the programme), this prevents from removing doubts regarding its sustainability although the repayment schedulle are likely to be eased in the future. In any case we believe Greece's economic strength will continue to be a source of uncertainty in the future, at least from time to time. In this respect, the next decisive event to be watched closely is the outcome of the country's early elections called for mid-September.

Domestic demand is driving Spain's economic growth. Thanks to the good performance by domestic demand and especially consumption, growth speeded up in Q2 to 1.0% quarter-on-quarter. This rate of growth in GDP is largely due to the expansionary effect of several temporary supports (some global such as falling commodity prices, the euro's depreciation and the ECB's quantitative easing; others domestic such as tax cuts). According to available indicators, economic growth remains strong at the beginning of the second half of the year and private consumption will continue to play an important part. Other positive aspects are underpinning the positive short-term outlook. The 2015 tourist season is looking excellent and a historical year is expected in this area. The pace of job creation is continues to be solid and occurring in all branches of activity. There has been a notable acceleration in credit, particularly for SMEs, while the default rate has been falling steadily. Given this positive situation, and supported by a favourable macroeconomic situation, the Budget presented by the Spanish government in July predicts that the public deficit will continue to fall in 2016 (to 2.8% of GDP).

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