Company: BBVXF
Filing Date: 2025-07-31
Form Type: 6-K
Source: 0000842180-25-000033
Chunk: 38

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-07-31
Form: 6-K
Chunk 38
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 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 an increase in losses on fixed income securities and higher default rates.

Uncertainty about the global economic outlook remains high, mainly due to the policies of the current U.S. administration. U.S. tariffs have risen significantly, reaching historically high levels. The impact of increased tariffs and uncertainty about their final level remains a persistent source of risk. Trade negotiations between the United States and its main partners continue, and disputes over the legal validity of the tariffs persist. In this context, and given expectations of large fiscal deficits and concerns over the Fed's autonomy, the U.S. risk premium has increased, pushing up long-term sovereign yields and contributing to a depreciation of the U.S. dollar.

While global growth remains relatively resilient, BBVA Research estimates that protectionism and uncertainty will weigh on economic activity. Specifically, it forecasts global GDP growth at 3.0% in 2025.

Growth in the United States is expected to slow from 2.8% in 2024 to around 1.7% in 2025. In China, growth could reach a still healthy 4.8% in 2025, down from 5.0% in 2024, mainly due to recent stimulus measures and smaller-than-expected U.S. tariff increases on Chinese exports. In the Eurozone, the impact of U.S. tariffs is likely to be cushioned by fiscal spending, mainly on defense. Growth is expected to be around 0.9% in 2025, in line with 2024 (0.9%). Tariffs are expected to reverse the disinflation trend in the United States, prompting the Fed to hold rates steady at 4.5% for longer. Monetary easing could resume in late 2025 if price pressures prove transitory.

In the Eurozone, while an additional rate cut is possible in the second half of 2025, the ECB may instead choose to keep interest rates unchanged at 2.0%.

In China, with inflation near zero, monetary conditions are expected to become more accommodative.

Beyond the significant risks related to new U.S. policies, geopolitical risks persist. Although energy prices remain relatively low, tensions in the Middle East and Ukraine could trigger