Frenzied rate cuts (more than a hundred worldwide) and liquidity injections by various central banks, amounting to more than $6 trillion, added to the fiscal stimuli of all kinds already committed for another $9 trillion. An unprecedented aid package that amounts to 19% of the world’s GDP in 2019. All aimed at trying to achieve a V-shaped recovery that will mitigate the effects (-5% of world GDP) of such an unexpected recession.
Bankia Estudios | None of the world’s major economies will avoid an annual contraction in GDP, with the possible exception of China, which could grow by a modest 1%, reported the institution. As for the Spanish economy, it has cut forecasts from the -8% estimated in April to -12.8%. For 2021, it estimates 6.3% growth , so that next year the level of GDP will still be 7.3% lower than in 2019 (4% in the previous revision). Spain’s worse performance is mainly due to the heavy weighting of tourism sector in GDP.
The association FuelsEurope, representing the European refining industry, expects to produce 30 million tonnes of low-carbon liquid fuels (eco-fuels) annually by 2035. This would mean a reduction in CO2 emissions with an estimated minimum of 100 million tonnes per year by that date, and emission neutrality by 2050 in Europe. The European counterpart the Spanish Association of Oil Product Operators (AOP) has launched a plan to introduce these eco-friendly fuels into the transport sector.
Apolline Menut (AXA Investment) | The Next Generation EU package is a genuine step forward. Joint debt issuance, fiscal transfers and proposed joint tax revenues are politically meaningful. But the package is too small (around 5% of EU GDP) and slow (peaking in 2023-2024) to be a proper cyclicalstabilisation tool.
The new plan will favour the mobilisation of investments worth 90 billion euros and create 107,000-135,000 jobs per year over the next decade. The government maintains that with the orderly development of the sector, 74% of electricity in Spain will be renewable by 2030, reaching 100% by 2050.
The main reasons for the downgrade are the economic deterioration in the regions where the bank is present, especially Mexico and Spain. However, it also flags that even after losing a rating notch, BBVA has sufficient financial cushion, geographical diversification and a good competitive position in its reference markets to avoid being affected by new downward revisions in the short term.
Intermoney | As the pandemic has eased in Europe, long-standing problems have returned to the forefront, one of which is the ever-present Brexit. According to the FT, there is greater willingness to bring positions closer together, so that there would be a breakthrough in the negotiations from 29 June, However, the conflictive issues remain and include: the UK’s demand to hold on to the access to its fishing waters, the disagreements over how to create a regulatory playing field to protect companies from unfair competition. There is also Brussels’ desire to wrap up all the parts of a future relationship into a single legal agreement.
European markets have opened higher this morning following some upbeat PMI data. Readings above 50 indicate growth and while the readings for Germany stopped just short, France’s numbers cleared that important level. France’s CAC 40 is up 1.6%, the UK benchmark FTSE 100 is up 0.8% but leading the way is the German Dax up over 2%.
Through one of its subsidiaries, Siemens Gamesa has received a conditional order from Innogy SE for the supply of 100 units of the SG 14-222 DD offshore wind turbine. The order, with a total potential of 1.4 GW, is for the Sofia wind farm, located 195 km off the UK’s northeast coast. The deal also includes a service and maintenance contract. The order represents 4.9% of Siemens Gamesa’s portfolio at end-March.
Moody’s has warned that over half of Spain’s non-financial companies rated by the credit agency are at risk of being downgraded in the next 18 months. This is in light of the prospect that their solvency will continue to weaken, even after the government relaxes restrictions on mobility and travel and eases social distancing. In fact, the ratings agency highlights that between March and May 2020, it took 29 negative actions on the ratings of Spanish non-financial companies.