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The two recurring themes that have determined the course of the global economy and represented the greatest sources of uncertainty in 2019 have been protectionist tensions and the threat of a no-deal Brexit.
Last December an increase of 20% was announced for minimum wages for this year. This will obviously mean an increase in the standard of living of those workers who perceive it: about a million people, according to the National Survey of Occupation and Employment (ENOE).
Industrial Production (IP) increased by 5.1% yoy in calendar adjusted terms, parallel to the market expectation of 5.5% in November. Thus, IP grew by 4.5% yoy in October-November period. We expect GDP growth in 4Q19 at around 5%, implying 0.8% growth in 2019. Our baseline forecast for 2020 GDP growth remains at 4%.
In a recent BBVA Research publication, we presented an economic policy uncertainty index based on the content published in the main national newspapers. What lessons about the current economic situation does the index, which is broken down by subject, offer?
The U.S. airstrike against Iranian Quds Forces General Qassem Soleimani triggered high levels of uncertainty in the region as Iran threatened to take revenge and the U.S. warned of further retaliation. Iran retaliated with missile attacks against two U.S. bases in Iraq but U.S. de-escalated the situation.
It is time to recapitulate what 2019 left us and what we should focus on in 2020. The year that has just ended left us in terms of the global economy great episodes of volatility marked by commercial issues but also by eternal political-economic novels such as Brexit.
The global economic outlook deteriorated in 2019, following the downturn already seen in 2018. Between January and October, BBVA Research reduced its global growth forecast for 2019 and 2020 by 0.3 percentage points (pp) to 3.2% and 3.1%, respectively — half a point less than the average from 2011 to 2018.
Consumer prices increased by 0.74% in December, beating the consensus estimate of 0.4%; led the annual CPI to end 2019 at 11.84%. In absence of shocks, Consumer inflation could stay between 11-12% in 1Q20 before experiencing levels close to 10.5% in 2Q20. We expect inflation to be 8.5% at the end of 2020.