January-December 2013


Macro and industry trends

In the latter part of 2013, the Spanish economy began to emerge from its long period of recession. This still incipient recovery is underpinned by the positive performance of exports and a less contractive domestic demand. These factors are improving market confidence. As a result, there has been no major financial tension, significant declines in the sovereign risk premium, and the economy has opened up to international financial flows. Even so, the recovery is still very modest, particularly in terms of unemployment, which is still above 25% of the active population.

As far as the financial system is concerned, the weakest part of the sector has continued to be restructured and reorganized, and in late 2013 it was confirmed that the financial assistance program agreed with the Troika (European Commission, ECB and International Monetary Fund –IMF-) would be ended. In November, the IMF and the European Commission separately published the fourth monitoring report on the restructuring of the sector, highlighting the progress made in bank recapitalization and restructuring, and in reinforcing the system’s supervision and monitoring. Lastly, the financial sector has continued with its deleveraging process, although the flow of new credit transactions granted in recent months in Spain shows an improvement driven by the corporate portfolio. However, the outstanding balance of loans continues to decline, having a negative impact on the sector’s NPA ratio, which at the end of October 2013 amounted to 13% for the system as a whole. This figure has also been influenced by the classification of refinanced loans.