Publications

Electricity grids are becoming a global bottleneck to the energy transition. Without faster, anticipatory investment, renewables and electrification will not reach their full potential. Digitalisation and storage help, but cannot substitute for grid expansion.

Food prices drove headline inflation for the month, while seasonal components hit a 10-month high. Increased forward-looking inertia has prompted us to revise our 2026 projection from 20% to 22%.

Monthly inflation in January stood at 1.18%, broadly in line with analysts’ expectations (1.16%) and BBVA Research’s forecast (1.21%). As a result, annual inflation rose to 5.35%, representing an increase of 25 basis points compared to December 2025 and marking the beginning of the inflationary process we expect for 2026.

Spain grew by 2.8% in 2025, driven by employment and domestic demand. Growth has been more extensive than intensive, with productivity remaining stagnant. Immigration has boosted employment and GDP per capita. The challenge is to raise both employment and productivity by increasing investment and improving its efficiency.

We estimate market-implied recession probabilities using logit models on daily financial variables across asset classes in the US and Euro Area. The results show strong forecasting power, often leading official recessions, and helps identify markets under stress, with deviations mainly driven by policy interventions.

The ECB has been holding its key policy interest rate at 2% for several months, with medium-term inflation forecasts close to its target and a relatively positive assessment of the European economy, which is growing near its potential rate.

We believe it will still have scope to resume gradual rate cuts later this year, as both weak domestic demand and the continued strength of the peso should help contain inflationary pressures going forward.