Company: BBVXF
Filing Date: 2025-02-21
Form Type: 20-F
Source: 0000842180-25-000010
Chunk: 134

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-02-21
Form: 20-F
Item: Item 5
Chunk 134
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 recent regime changes in Syria create opportunities, such as a potential increase in exports and lower migration pressures, but also risks, which could cause greater volatility of Turkish financial assets, among other possible consequences.
In Argentina, the risk of economic and financial turbulence persists in a context in which the government has substantially modified the economic policy framework and has focused its efforts on implementing strong fiscal and monetary adjustments to reduce inflation. The significant exchange rate devaluation implemented in December 2023 and the strong fiscal adjustment announced in early 2024 have further reinforced short-term inflationary pressures.
In Colombia and Peru, climate-related factors, political tensions and greater social conflict could have a negative impact on the economy. 
Operating Environment
The below discussion of BBVA’s operating environment includes the current expectations, estimates and beliefs of BBVA Research, based on internal and third-party sources, with respect to the future evolution of macroeconomic conditions. These expectations, estimates and beliefs are subject to uncertainty, and the actual evolution of macroeconomic conditions could differ materially from any expected evolution described below.
Our results of operations are dependent, to a large extent, on the level of demand for our products and services (primarily loans and deposits but also intermediation of financial products such as sovereign or corporate debt) in the countries in which we operate. Demand for our products and services in those countries is affected by the performance of their respective economies in terms of Gross Domestic Product (“GDP”), as well as prevailing levels of employment, inflation and, particularly, interest rates. Typically, the demand for loans and saving products correlates positively with income, which correlates in turn with GDP, employment and the evolution of corporate earnings. Interest rates have a direct impact on bank results as banking activity mainly relies on the generation of positive interest margins by paying lower interest on liabilities, primarily deposits, than the interest received on assets, primarily loans. However, it should be noted that higher interest rates, all else being equal, also reduce the demand for banking loans and increase the cost of funding and also typically lead to unrealized losses on fixed income securities and higher default rates.
Economic growth remained relatively strong in 2024, primarily in the United States and the services sector. BBVA Research estimates that global GDP expanded by approximately 3.2% in 2024. This resilience occurred in an environment where public spending remained generally high and labor markets tight. Due in part to restrictive monetary conditions, inflation moderated throughout 2024, aided by falling energy prices (despite geopolitical tensions in some producer regions) and productivity gains (