Global recovery in an uncertain environment

The global economy is entering a year full of political and geopolitical uncertainties that can have a considerable impact on confidence and economic policies. Added to the war conflicts are key elections in much of the world, including the United States and the European Union, the results of which could lead to a more polarized, less globalized and even more protectionist world regarding trade and immigration issues. However, Not everything is negative in the global economic outlook. The incipient signs of improved productivity in the United States and the high resilience of its economy to the abrupt rise in interest rates, which has become particularly visible in the services sector and the labor market, have been surprising. One of the unknowns in the economic policy debates in recent months is how it has been possible for monetary policy to help moderate inflation without hardly affecting the unemployment rate (answer: it was largely supply inflation). In any case, in BBVA Research's forecasts we have revised upwards the growth for this year of the North American economy to 1.9%. The outlook is less positive in the other two large areas of the known as G3. China continues its dynamic of structural slowdown and will grow around 4.6%, somewhat less than official objectives. But the combination of high production, low consumer demand (which the Government wants to correct), the disorderly adjustment of the real estate sector, as well as protectionist and demographic pressures, suggest that the problems may continue in the future. About the eurozone , we continue to think that it will gradually recover this year thanks to the moderation of inflation, the strength of the labor market and the increase in real incomes, growing around 0.7%, although the risk is that the improvement will take time to arrive. more than expected. Europe also faces major structural challenges, not only economic and fiscal, but also institutional, to confront in a coordinated manner an avalanche of geopolitical, commercial and unavoidable energy transition pressures. In the face of these challenges, the economic policy debate continues. focused on the times and rhythms of relaxation of interest rates in the United States and Europe, which will probably begin in the middle of the year thanks to the (still incomplete) normalization of inflation. In any case, the world we are going to will be one with higher interest rates than we saw in the years prior to the pandemic, given that the disinflationary pressures and excess liquidity of the past are not expected to return. Miguel Jiménez González -Anleo, from BBVA Research. Follow all the Economy and Business information on Facebook and xor in our weekly newsletter