International economy

From this page you can access thematically grouped Analytical Articles published in the Economic Bulletin from 1999, ordered by date of dissemination within each year.

All documents are available in PDF format PDF File. Opens in a new window

  • 03/12/2019
    Global impact of a slowdown in China (312 KB) Xu Bing, Moritz Roth and Daniel Santabárbara

    Given its systemic importance, a sharp and sustained economic slowdown in China affects the world economy, not only on account of its share of global GDP, but also because of its links with other economies through trade, the commodities markets and, on a more incipient level, the global financial system. Developments in China also have indirect effects on global uncertainty and confidence. This article presents various simulations of the negative impact that a sharper slowdown in the Chinese economy than expected by the main analysts would have on the global economy and, especially, on the euro area. Specifically, a further slowdown in annual growth of 1 pp in China would give rise to a decline in global growth of 0.4 pp in a year, with particularly marked effects on commodities producers and on the Asian economies.

  • 07/11/2019
    Report on the Latin American economy. Second half of 2019 (786 KB)

    This article analyses the recent performance of the main Latin American economies (Brazil, Mexico, Argentina, Colombia, Chile and Peru). In the first three quarters of 2019 the region’s growth was once again lower than expected and below that of other emerging areas of reference. This lower growth is essentially explained by domestic factors (political and economic policy uncertainty and structural problems of low potential growth), although the external environment has not been favourable either in terms of developments in world demand and in the terms of trade. Most central banks in the region have reduced policy interest rates given the absence of inflationary pressures, the existence of negative output gaps and the relatively stable performance of exchange rates. Fiscal space is limited in most of the economies and certain risks to the sustainability of their public finances persist in some of them. The main international organisations and private institutions expect activity to rise in the coming quarters, especially domestic demand. This would be based on looser financial conditions and improved external conditions (lower trade tensions) and domestic conditions (agents’ confidence). In this setting, the balance of risks is tilted downwards, given the persisting doubts about economic policies in the main countries in the region and about the dissipation of political uncertainty, and about the improvement of the international economic situation.
    This report includes two boxes. Box 1 analyses the channels which could be transmitting global trade tensions to Latin America. Box 2 describes the economic situation in Argentina after the worsening of the financial turmoil last summer.

  • 28/10/2019
    The Federal Reserve review of its monetary policy framework (399 KB) Susana Párraga, Pedro del Río and Juan Luis Vega

    This article offers an overview of the monetary policy framework review currently being conducted by the United States Federal Reserve (Fed). First, we examine the alternative strategies under consideration to address the likely greater incidence of episodes in which monetary policy is influenced by the existence of an effective lower bound (ELB) to which the policy rate can fall. We also discuss how the available empirical evidence drawn from the Fed’s own experience makes it likely that it will retain in its toolkit the non-conventional monetary policy instruments adopted in the wake of the global financial crisis to tackle the problem of the greater incidence of the ELB: namely, quantitative easing and forward guidance. Finally, we analyse possible changes in the Fed’s communications policy.

  • 17/10/2019
    Tariff protectionist measures and Spanish goods exports (616 KB) Eduardo Gutiérrez Chacón and César Martín Machuca

    The rise in global protectionist tensions in recent years has, after decades of across-the-board declines, entailed increases in tariffs that are proving detrimental to international trade and thereby affecting the Spanish economy’s external sector outlook. This article estimates the effect of tariffs on Spanish non-energy, non-EU goods exports drawing on data broken down by country of destination and type of product. The results show that an increase in tariffs adversely impacts both export possibilities and, persistently, export values. On the estimates made, a 1% increase in import tariffs imposed by another country on a Spanish product entails a reduction in nominal exports of around 0.6%. Protectionist risks underscore the role of the EU in promoting international trade agreements, such as those recently entered into with Japan, Canada and Mercosur.

  • 10/10/2019
    Leveraged loans: definition and market development (437 KB) Carlos González Pedraz

    Over the past decade, the volume of leveraged loans has grown to reach its highest level since the end of the crisis. Growth has been more contained in Spain, which accounted for 5% of the total volume of such lending in Europe in the period 2016-2018.
    The terms and conditions of leveraged loans have become less restrictive and a large proportion is distributed among institutional investors worldwide, in the form of collateralised loan obligations (CLOs). This originate-to-distribute model poses potential risks for the financial system. In the event of a cyclical downturn the losses in this market could be significant, in particular, owing to the relaxation of investor protections. In addition, given the importance of these loans as a source of corporate financing, a rise in defaults would have adverse effects on the real economy.

  • 17/05/2019
    The impact of China on Latin America: trade and foreign direct investment channels (623 KB) Jacopo Timini and Ayman El-Dahrawy Sánchez-Albornoz

    The economic, political and institutional ties between Latin America and China have become closer as the Chinese economy has grown. Indeed, as a result of its rapid economic growth, China now plays a systemic role in the world economy. However, since the global financial crisis, the Chinese economic model has shown signs of exhaustion and controlling the rate of growth may prove to be a particularly difficult challenge, taking into account the profound structural transformation to be addressed and the high level of debt of the Chinese economy. Against this backdrop, the article provides an empirical analysis of the effects on the Latin American countries’ growth of their trade and investment relations with China. It also analyses the channels through which the Chinese economic slowdown is transmitted to the region. The study shows that, through the trade channel at least, an unexpected slowdown in China could have a negative impact on economic growth in Latin America.

  • 16/05/2019
    Capital flows to emerging economies: recent developments and drivers (571 KB) Luis Molina and Francesca Viani

    Emerging markets have gained prominence as recipients of capital flows since the onset of the financial crisis in 2008. This raises their exposure and goes hand in hand with greater dependence on external financing and heightened sensitivity to global shocks. However, some differences can be observed across regions. For example, while the more stable types of capital flows (direct investment) continue to outweigh other types in Latin America, in Asia and the Middle East the recent increase in capital inflows has taken the form of debt, private in the case of Asia and mostly government debt in the Middle East. Against this background, this article examines the impact on the capital flows to these economies of five potential global shocks: an appreciation of the dollar, a fall in commodity prices, an increase in global aversion to risk, expectations of monetary policy tightening in the United States and lower regional growth compared with advanced economies. The findings of this article suggest that the factor with the greatest impact on portfolio flows to emerging markets is the appreciation of the dollar although, in the case of Latin America, commodity prices also play a very significant role.

  • 14/05/2019
    Report on the Latin American economy. First half of 2019 (1 MB)

    This article reviews the recent performance of the main Latin American economies, in a difficult external environment, owing to the slowdown in the world economy and the uncertainty associated with trade tensions. Growth in 2018 was lower than in 2017 and lower than projected at the start of the year, primarily on account of the severe recession in Argentina and a slower than expected recovery in Brazil. Activity is expected to be more positive in these countries in 2019, but a slowdown is forecast in Mexico. In addition, the risks remain predominantly on the downside. Among the internal risks, the uncertainty surrounding the economic policies to be implemented in Brazil and Mexico stands out. This issue is analysed in detail in this article. Two other articles on specific aspects of the performance of the Latin American economies will be published together with this one: “Capital flows to emerging economies: recent developments and drivers”, and “The impact of China on Latin America: trade and foreign direct investment channels”.

  • 09/05/2019
    The latest protectionist trade trends and their impact on the European Union (682 KB) Francesca Viani

    In an attempt to rebalance trade with China, the United States administration decided in early 2018 to introduce a series of protectionist measures affecting certain imports in particular. This gave rise to an escalation of US-China trade tensions. The new tariffs have affected a significant percentage of Chinese exports to the United States, but their impact on EU trade has only been marginal to date. The indirect effects on European economies through the global value chains have also been limited. However, possible tariff barriers on the automotive sector could raise the affected trade flows substantially.
    Simulations made with econometric models confirm that the tariff measures adopted to date would have relatively moderate direct effects on global economic activity and on EU countries. That said, the simulations also warn that a decrease in business confidence and an unfavourable reaction by international financial markets could amplify such adverse effects. Additionally, possible future auto sector tariffs could have a significant impact on European economies in an industry already facing important challenges associated with the structural and technological transformation process currently under way.

  • 09/05/2019
    World economic outlook for 2019 (698 KB) Pedro del Río and Esther Gordo

    Recent weaknesses in the world economy have prompted a downward revision of forecasts for 2019. The baseline projection scenario points to a widespread easing of growth, albeit more so in some areas than in others, against a backdrop of high uncertainty and significant downside risks. These include, most notably, the possible proliferation of protectionist measures, a disorderly no-deal Brexit, a sharper than expected slowdown in China or in the euro area, or a severe financial market adjustment. Any – or a combination – of these events could have a significant impact on the world economy, in a setting in which there is little room for manoeuvre in macroeconomic stabilisation policies.

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