Behind the upward revision of global growth forecasts lies the hope placed in the effectiveness of vaccines. Once the virus is overcome, the pent-up demand from the lockdown, highly favorable financial conditions, and strong fiscal stimulus guarantee an intense economic recovery in the coming months. This is reflected in the upward trend of financial markets since the beginning of the year.
Financial assets are considered leading indicators of economic performance, fueled by the expectations of economic agents themselves. The best example is the recent performance of banks on the stock market, leading the gains and thus correcting their past undervaluation. Everything that is positive for the economy is also positive for banks and vice versa, demonstrating the sector’s importance for development and prosperity.
The debate among economists no longer focuses on when the recovery will begin, but on its strength. The Bank of Spain predicts that the GDP level existing prior to the health crisis will not be recovered until 2023, which is too long considering the damage the pandemic has caused to the economy and society. European funds can provide a final boost to demand, although it would be more appropriate to see them as a catalyst for structural reforms and supply-side measures that lead to an increase in productivity and, therefore, potential growth.
European funds offer Spain the scope to respond to the crisis and modernize the productive fabric. Banks, as always, offer their collaboration to the authorities; they can contribute to driving the recovery through their capillarity and proximity to the customer, advancing funds and co-financing and promoting projects in areas where they have knowledge and experience.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
