Developed economies take over from the emerging

Good macroeconomic figures for the developed economies are coming to the fore. This summer, unlike the previous two, has been marked by relative calm in the euro area's financial markets: the risk premium of periphery countries has fallen to its lowest level for the last two years thank partly to the upswing in the German bund. Without doubt, the euro area coming out of recession has helped, while the United Kingdom and United States have also confirmed their economies are performing well. But we must not forget that some of this incipient recovery in developed economies is due to ultralax monetary policy.

In the USA there is still uncertainty regarding when and how quickly the Fed will reduce its stimuli. At first, the Fed announced a tentative schedule to reduce its rate of financial asset purchases depending on the unemployment rate and inflation trends. However, over the summer there have been numerous statements, sometimes contradictory, from different key members of the Fed regarding their preferences for withdrawing stimuli sooner or later. For the time being, the economy's recovery is continuing apace but improvements in the labour market are taking longer to appear. 2Q GDP growth has been revised upwards to 1.6% year-on-year but the unemployment rate continues to resist any downward slide. The real estate market is also showing signs of improving in spite of the upswing in mortgage rates.

The Bank of England and European Central Bank have adopted a policy of forward guidance, announcing that official interest rates will remain unchanged or lower for an extended period of time. The Bank of England has gone a little further by conditioning its monetary policy on the unemployment rate falling below 7%, following the Fed's example. It has even said it will increase stimuli if financial conditions become more restrictive. Although less aggressive, the ECB's new strategy represents a significant change in its rhetoric. To date, the ECB had been reticent to commit to any pre-established path for interest rates. However, the difficulty encountered in monetary policy being passed on to credit conditions in some euro area countries has led the ECB to use all the tools it has available. For the moment, interest rates, the euro and the stock markets have stabilised.

The central banks of the emerging countries have been forced to act given the upsurge in financial and exchange rate tensions. In sharp contrast with dev eloped economies, growth in the emerging is running out of steam. But the financial turbulences they are suffering from are of more concern: yield on sovereign and corporate bonds has shot up, stock markets have plummeted and currencies have depreciated. This all has a common cause: capital outflows. However, there are significant differences between countries: those that are more dependent on external financing, such as Brazil, India, Indonesia, South Africa and Turkey, are seeing greater depreciation. Syria's instability is not helping either, pushing up oil prices which, should they remain at these levels, would damage the competitiveness of the oil-importing emerging countries. All this has led their central banks to take urgent measures to defend their currencies, raising interest rates or establishing controls on capital.

In the euro area, activity continues to show signs of stabilising, albeit within a fragile situation. After six consecutive quarters of declines, the euro area posted 0.3% growth quarter-on-quarter in 2Q 2013. The improvement is widespread: Germany and France are leading the recovery (0.7% and 0.5% respectively) while the recession continues to diminish in the periphery. Moreover, leading business indicators still suggest that this recovery will continue apace, supported by better financial conditions and dynamic exports. However, there are still downside risks due to the possible impact of the slowdown in emerging countries in the export sector and the need to find a definitive solution to the problems of periphery countries.

In Spain, the improved economic outlook should not slacken the pace of reforms. GDP is close to stabilising (–0.1% quarter-on-quarter in 2Q 2013) and its composition has improved: support by the foreign sector is still key while domestic demand is showing signs of stabilising. Business and confidence indicators for 3Q 2013 point to an impending return to positive growth figures, albeit modest ones. The labour market is also showing signs of  improving beyond the effects of the tourist season: the export sectors are starting to generate employment. To ensure such incipient encouraging signs consolidate, the IMF recommends continuing to make the labour market
more flexible, improve company competitiveness and also the business environment in general. Only then will the foundations be laid for a modern economy with the capacity to grow.