Pablo Hernández de Cos: 18th Banking Industry Meeting

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the 18th banking industry meeting, organised by IESE (Escuela de Negocios de la Universidad de Navarra), Madrid, 17 May 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Allow me to begin by thanking the IESE for inviting me once again to this event. On this occasion, I would like to share with you the Banco de España's analysis of the situation and outlook for the Spanish banking industry.

In terms of the macroeconomic setting, most strikingly, economic activity in Spain and the euro area has proved more resilient than expected in recent quarters, amid highly adverse negative shocks. Further, there appear to be signs of renewed buoyancy in 2023 to date.

According to the Banco de España's latest projections, in 2023 real GDP growth in Spain will be substantially lower than in 2022. However, faster than expected growth in the first quarter, together with the recent revision of the historical series, suggest that GDP growth this year could exceed the 1.6% envisaged in our most recent projections and outstrip 2% on average in 2024 and 2025.

This sharper GDP growth would be driven by, among other factors, the expected easing of inflationary pressures (and the ensuing recovery in agents' confidence and real income), the disappearance of the global production chain disruptions and the deployment of the Next Generation EU funds.

However, these projections are subject to very high uncertainty and there are risks that less positive scenarios will materialise. In particular, the possible duration of the war in Ukraine continues to be the main source of risk. The future course of the world economy is also a cause for concern, in a context of global monetary policy tightening and significant geopolitical risks.