Since the publication of the latest edition of Spanish Economic and Financial Outlook (SEFO) last May, two landmark events have taken place. Domestically, Spain´s follow-up, general elections should bring increased political stability to the Spanish economy and financial sector. Internationally, the result of the UK´s referendum to leave the EU has significantly increased the climate of global uncertainty. In addition to Brexit, the global economic context has deteriorated as a result of renewed turbulence in European banking systems, together with general doubts regarding the ability of the EU to stimulate growth and create jobs. Moreover, there has been a weakening of economic growth in emerging economies.

The global economy should avoid a new recession, thanks in part to the support of the ECB´s expansionary monetary policy. In this context, Spain´s economic recovery is outperforming expectations and economic growth should remain relatively strong until the end of the year. Nevertheless, although the electoral period may be over, the deterioration in global conditions, together with the possible end of low oil prices, means risks to projections are on the downside.