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With a divided Congress, and in a highly polarised political environment, it seems unlikely that Joe Biden’s government will be able to push through proposals that drift far from the centre of the political spectrum. Not only that, it could also have difficulties in pushing through basic measures such as raising the debt ceiling.

The volatility of the main asset classes continued to decline in December, while liquidity improved in the US and financial conditions were eased, although risks related to geopolitics and AI persist. The main stock indices extended the rally that had begun in November, while long-term sovereign yields rose. The euro consolidated its appreciation in the year, while oil closed down at a four-year low due to oversupply and investors' medium-term reading of the situation in Venezuela. Precious metals experienced a historic rally, albeit not without setbacks.

While economists have been incorporating big data into their analyses for a number of years now, the COVID-19 pandemic has produced a veritable revolution in real-time economics. The latest contribution from the CaixaBank Research team to this revolution is the Real-time economics portal, launched on 8 November 2022.

We thus find ourselves in a period of extreme fragility in which, more than ever, it seems essential to avoid any misalignment between fiscal policy and monetary policy in order to minimise the risk of financial panic. The fact that the latest incident of this kind took place in the United Kingdom – a country with deeply liquid markets and whose currency still serves as an international benchmark – serves as a stark warning to seafarers that the seas are rough and the skies are clouded.

The COVID-19 crisis has been a shock on a global scale, but its economic impact has been quite uneven from country to country, reflecting differences in productive structures and public policy response. Given this asymmetry, it is no surprise that the recovery is also occurring at very different paces, exacerbated by the discriminatory access to the vaccines and the continuous new outbreaks of the virus.

The energy crisis has served as an incentive within the EU to accelerate the transition to energy sources that are more environmentally friendly and less dependent on fossil fuels, but this is seen as more of a medium-term goal.

In 2024, the global economy remained resilient in an environment marked by restrictive financial conditions and the major international economies managed to grow by more than expected. Nevertheless, 2025 is still set to be a challenging year: the threat of greater economic fragmentation has now been added to the risk map, with an increase in trade barriers and uncertainty.

After growing by 3.2% in 2024, in 2025 the economy is expected to continue to grow above the euro area average, supported by strong household consumption and the recovery of investment. The major geopolitical challenges and Europe’s weak growth represent the main risk factors.

Last year, when we witnessed the heavy blow that the pandemic dealt to the economy, an intense debate began regarding what shape the recovery would take. The more pessimistic predictions opted for somewhat disheartening letters, such as L, W or K.

The economy continues to enjoy strong growth, with domestic demand acquiring a more prominent role, largely supported by the buoyancy of the labour market. Electricity keeps inflation at around 3%, while house sales buck the upward trend for the first time since 2024.

On balance, all the indicators suggest that growth in the euro area will experience a notable slowdown in Q4 due to the bottlenecks, although for the time being we are confident that the quarter-on-quarter growth rates will still be above their long-term average.

The Spanish economy has once again exceeded our expectations in the opening months of 2024. While the GDP growth figure for the final quarter of 2023 was higher than expected, that of the first quarter of this year confirms the good performance of Spain’s economy and leads us to revise our forecasts upwards. Let’s re-examine the main factors that will determine the outlook for Spain’s economy, after incorporating the latest available information.

The good performance of the foreign sector, especially services exports, largely explains the significant buoyancy that the Spanish economy is showing. Besides the usual strength of tourism, the strong growth of non-tourism services also stands out.

As the age-old saying, which is so topical in light of the war in Ukraine and the energy crisis, puts it: «hope for the best, prepare for the worst».

The start of 2025 has brought a change in the focus of the financial markets, which was consolidated in February. Investors have shifted their attention away from the central banks, which were the main driver of the markets in 2024, towards an environment of high geopolitical risk, with the «Trump effect» as a key catalyst.

This year’s return to fiscal rules – as safeguards of the sustainability of public debt – and the persistent shortfall in investment needed to address the EU’s priorities in the current geopolitical context create a scenario marked by frictions that requires a coordinated fiscal strategy that far exceeds the horizon of national and EU political mandates, both in duration and ambition. Therefore, it is essential that the differences that exist, as well as some taboos that have characterised the EU’s economic history on other occasions, are overcome.