Company: BBVXF
Filing Date: 2025-01-30
Form Type: 6-K
Source: 0000842180-25-000002
Chunk: 7

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-01-30
Form: 6-K
Chunk 7
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 positive inflation.

Policies adopted by the new administration in the United States, on which there is high uncertainty, will be key in 2025. The expectation of additional protectionist measures and high fiscal deficits would put upward pressure on inflation and downward pressure on growth, according to BBVA Research. Thus, despite recent resilience, US growth would moderate from 2.7% in 2024 (20 basis points above the previous forecast) to 2.0% in 2025 (10 basis points below the previous forecast). The likely upturn in inflation, which closed 2024 at 2.9%, will reduce the scope for the Federal Reserve (hereinafter FED) to ease monetary conditions further. In particular, interest rates, which were cut from 5.5% to 4.5% during 2024, would converge to around 4.0% during the first half of 2025, remaining at these relatively high levels during the second half of the year, which, among other things, would contribute to the strength of the US dollar.

The possible increase in tariffs in the US would be a negative shock to the global economy, whose GDP would moderate to around 3.1% in 2025 (20 basis points lower than previously expected). In particular, it would add to the structural challenges that China and the Eurozone currently face. In this context, BBVA Research forecasts that Eurozone GDP will expand by 1.0% in 2025 (40 basis points lower than previously forecast), having grown by 0.8% in 2024 (10 basis points higher than previously forecast), and that growth in China will moderate to 4.1% in 2025 (10 basis points lower than previously forecast) from 4.8% in 2024 (20 basis points higher than previously forecast). The relative weakness of economic activity would contribute to inflation remaining contained at around 2.0% in the Eurozone and remaining low in China. Against this macroeconomic environment, additional interest rate cuts are likely to be seen in both regions. In particular, in the Eurozone, the European Central Bank (hereinafter ECB), which cut deposit facility rates from 4.0% to 3.0% in the course of 2024, is expected to cut them further to around 2.0% in mid-2025.

Both geopolitical factors, including a further escalation of conflicts in Ukraine or the Middle East, and possible policies of the