increases in employment, following several years of strong growth as a result of pent - up demand during the crisis. investment in housing will continue to grow notably, boosted by job creation and the availability of credit under favourable conditions. also, business investment will remain robust, in line with the expected course of final demand, against a background of most notable headway in the ongoing restructuring of corporate balance sheets and of persisting easy financial conditions. turning to external demand, the cumulative gains in competitiveness that i referred to and the sound outlook for the international economy as a whole and, in particular, for the euro area, are expected to continue making for a dynamic spanish export performance. risks this predominantly favourable scenario is subject to various sources of risk. for example, developments on global financial markets. in february we saw how the high valuations attained by certain financial assets can give rise to bouts of price corrections and notable rises in volatility. any future intensification of these episodes, which to date have originated in us markets, might have adverse consequences for economic activity and for financial stability. furthermore, it is complicated to anticipate how brexit, and its consequences in terms of trade in goods and services or in movements of people and capital, will unfold. but, in any event, protracted uncertainty over the final agreement intensifies the risks of an adverse impact on activity. on the domestic front, the risks associated with the political situation in catalonia remain. the baseline scenario of our december projections included the negative effects of the increase in uncertainty relating to political tensions. specifically, on that occasion it was considered that the scope of the events already observed would be relatively limited and temporary, albeit not negligible. so far, the information available appears to confirm that recent economic developments are not far removed from the scenario anticipated, with effects that appear to have been confined to catalonia. specifically, since summer 2017, the performance of the catalonian economy appears to have been relatively worse than that of the rest of spain in terms of the figures, for example, on domestic spending and tourism. elsewhere, the indicators measuring the degree of economic and financial uncertainty suggest a reduction in this variable. the incidence of this source of risk will depend on the intensity and persistence of the tensions. an easing in these tensions might lead to higher growth than that considered in our december projections. conversely, a hypothetical rebound in tensions might lead to an increase in uncertainty resulting in a more pronounced impact on agents ’ spending decisions.

sentiment, although still weak, responding to the announcement of the comprehensive plan for financial revitalization, the so - called total plan, and to the emergence of expectations for permanent tax cut. in money markets, with the heightened awareness toward financial problems at a bank, concerns over credit risks of financial institutions strengthened once again, and upward pressure on interest rates suddenly mounted toward the end of june. however, with the ample provision of funds by the bank of japan and the announcement of the total plan, market anxieties settled down, and the upward pressure on interest rates gradually eased. with respect to monetary aggregates, growth in m2 + cds has been slowing, reflecting the sluggish private bank lending. these developments appear to strongly reflect the further decline in credit this report was written based on data and information available when the bank of japan monetary policy meeting was held on july 16, 1998. the bank ’ s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on july 16, as the basis of monetary policy decisions. - 2demand of private firms with the worsening of overall economic activities, and the continued cautious attitudes of private banks in extending loans. meanwhile, some firms, especially small and medium - sized firms, have been facing difficult financing conditions in terms of both funds availability and fund - raising costs. this influence on the overall economy continues to warrant careful monitoring.