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Turkey: Robust 2Q GDP growth, as expected

September 11, 2017
2Q17 GDP growth came in at 5.1% yoy, just in line with our expectation. Investment and private consumption were the main contributors whilst government spending contribution was negative for the first time in 9 quarters. We expect even a higher growth performance in 2H so risks on our 2017 forecast are on the upside.

Taxes, growth and social welfare

September 11, 2017
As Oliver Wendell Holmes Jr. stated in 1904, and as appears inscribed on the façade of the US Internal Revenue Service Building, “taxes are what we pay for a civilized society”. However, it is difficult to answer the question of whether we pay too much or too little without taking into account what we receive in return.

Europe’s exit from QE

September 11, 2017
At its meeting this week, the ECB decided to hold off until October before making a statement on withdrawing monetary stimuli. With the question of when decided, this now leaves the next unknown to be clarified: the matter of how this will be done. The process is a complex one, since it encompasses several different aspects, and the ECB is not giving any clues.

U.S. | Weekly podcast: Libor, inflation and retail sales

September 9, 2017
Weekly economic update focusing on the major economic indicators to be released the week of September 11, 2017. Special topic: transitioning away from Libor

Turkey: Activity accelerates further

September 8, 2017
Industrial production in July grew by 14.5% yoy (cal.adj.). Our monthly GDP indicator (GBTRGDPY index at Bloomberg) nowcasts 5.1% GDP growth for 2Q and hints even higher performance for 3Q. Considering also an acceleration in 3Q with both base impact and enhanced activity, we believe that the risks on our 5% GDP growth expectation for 2017 are clearly on the upside.

Financial Regulation: Weekly Update. 8 September 2017

September 8, 2017
Highlights: FSB includes key attributes of resolution regimes into the list of minimum requirements for good practices. Spanish Ministry of Economics issued a consultation regarding investment firms. The BCBS announced a cooperation agreement with the IFRS Foundation. Finally, the FRB adopted a final rule regarding qualified financial contracts.

ECB Watch: The ECB will go ahead with QE decisions in October

September 8, 2017
Effects from euro appreciation and QE strategy dominate today’s meeting. After very preliminary discussion on alternative scenarios to calibrate QE, decisions will most likely be taken in October. The volatility of the exchange rate is seen as a source of uncertainty, but the new projections are optimistic: stronger growth and only a slight downward revision of inflation

Exposure of international banks to Latin America

September 7, 2017
In the context of a reduction in global cross-border funds, this report explores the recent evolution of international banks’ exposures to Latin America using BIS statistics. Latin America is one of the few regions in the world where the exposure of international banks continued to increase as result of the strong presence of international banks with local operations.

Portugal: growth slows in 2Q17

September 7, 2017
The growth rate of the Portuguese economy in 2Q17 decelerated to reach 0.3% QoQ, in line with the BBVA Research estimate (0.4% QoQ) and below that seen in 1Q17 (1.0% QoQ). Based on data so far available, BBVA Research estimates that growth in 3Q17 will be around 0.5% QoQ.

Digital Economy Outlook 2017. September 2017

September 7, 2017
In this issue we will focus on: Banks and new digital players: is there a level playing field?; The paradox of the digital consumer: more demanding but less aware of his rights; PSD2 implementation: transposition deadline draws closer; Central Bank Digital Currencies (CBDC): challenging the financial system as we know it and; Financial innovation policies across the EU

Mexico | Income in Mexico and evolution of poverty: Notes on the new ENIGH 2016

September 7, 2017
Appropriate the development of the Statistical Model to ensure historical comparability. The new ENIGH shows a decline in both poverty and extreme poverty compared to the year 2014; however, Mexico still faces important challenges in this area, since 43.6% and 7.6% of the population are in poverty and extreme poverty respectively.

Monthly Economic Monitor Turkey

September 6, 2017
Our monthly GDP indicator signals 6% growth in July with available preliminary indicators (32% info) and acceleration will gain pace resulting in at least 7% growth in 3Q even if GDP would not grow at all on quarterly basis. High trend in inflation (around 11% until December) will force the CBRT to stay tight a little longer despite the recent retreatment in USD/TL.

Country Risk Report. Third Quarter 2017

September 6, 2017
Financial markets’ risk-on mood tightens sovereign spreads beyond fundamentals, while financial disequilibria turn on some warning signals in some Advanced Economies

Mexico | Remittances increase by 9.4% in July, but decrease in real terms

September 5, 2017
We estimate that for the second half of 2017, the receipt of remittances will continue to grow in dollars albeit at a more moderate pace than in the first half-year, but the actual amounts in pesos to reach households in Mexico will be lower in comparison to the previous year due mainly to the appreciation of the peso

Inflation: Outlook worsens on core dynamics

September 5, 2017
In August, consumer prices rose by 0.52%, higher than the consensus (0.1%) and even our estimate (0.3%). FX pass-through mostly on the recent appreciation of Euro, second round price effects and spill-overs from the narrowing output gap continued to be the factors behind. We expect the headline to stay close to 11% before it would fall to 9-9.5% at the end of the year.