explains the gains in competitiveness recently attained by the spanish economy. turning to prices, the annual report pays particular attention to the factors underpinning the recent disinflationary phase in spain. the analysis concludes that, beyond the influence the prolonged weakness of spending and the fall in oil prices may have had, there has been greater responsiveness by prices to changes in the economic situation, which might be attributed, at least in part, to the reforms in certain markets and services. retaining this greater degree of flexibility in price - and wage - setting is vital so that, in the face of adverse shocks, adjustments may be made through relative prices and not at the expense of economic activity and employment, as has traditionally occurred in the spanish economy in recent recessions. there has likewise been a notably sharp correction of the external imbalance, with external surpluses being attained in the past three years, albeit of a smaller amount in 2014. nonetheless, the correction of the international investment position ( iip ), a debtor position equivalent to 93. 5 % of gdp at the close of 2014, is proving very gradual, which denotes the need to maintain the gains in competitiveness achieved, so as to improve the current account balance and reduce our still - high level of external debt. the role of external conditioning factors let me now refer to the external conditioning factors in the recovery of the spanish economy. the world economy lost momentum in 2014, particularly so in the euro area. euro area growth was very weak in the second and third quarters of the year and only thereafter did it begin to show somewhat greater strength. on this occasion, moreover, germany and france – the area ’ s two biggest economies and two of our biggest trading partners – were also affected. the latest ecb projections point to a moderate recovery, whereby the area ’ s gdp is expected to grow 1. 5 % this year and 1. 9 % in 2016. these are, then, clearly lower rates than those projected for our economy. other external developments have provided a boost to activity. i have already mentioned the fall in oil prices. unquestionably, though, the most durable positive external impulses stemmed from the ecb ’ s monetary policy and the start - up of the banking union. bis central bankers ’ speeches throughout last year and in 2015 to date, the ecb has continued to deepen its expansionary monetary policy stance. once again, it has combined conventional measures, cutting official interest rates and placing the deposit facility

banking sector, is expected to amount to €55 billion in 2024. in the national arena, the recently approved legislation on the recovery and resolution of credit institutions and investment services firms distinguishes between pre - emptive resolution functions, which correspond to the banco de espana in the case of credit institutions and to the national securities market commission ( cnmv ) in that of investment services firms, and enforcement resolution functions, attributable to the fund for the orderly restructuring of the banking sector ( frob ), which sits moreover on the srm board, with the banco de espana having observer status. performance of credit institutions in 2014 before concluding, i shall review the recent performance of spanish credit institutions. the year 2014 saw an improvement in financial conditions and a recovery in activity and employment. lending to the resident private sector in spain continued to shrink in 2014, in line with the need for the deleveraging of the spanish economy ; that said, the rate of decline of lending eased ( from 8. 3 % in 2013 to 6. 4 % in 2014 ). at firms not engaging in construction and real estate activities, credit fell much less, shifting from a negative rate of 9 % in 2013 to a still - negative rate of 1. 5 % in 2014. the figures available for 2015 suggest that the year will conclude with credit running at a rate of change very close to zero or in positive territory for the first time since 2009. one key aspect in 2014 was the fact that non - performing loans ( npls ) to the resident private sector fell both in absolute terms ( by more than €24 billion ) and in terms of the npl ratio, which declined by almost 1 pp to 12. 9 %. in 2015 to date, this trend is holding, as npls have fallen to 12. 3 %. resident private - sector refinanced exposures have fallen by 4. 5 % and account for 14 % of the total, a proportion still highly influenced by forborne exposures to real estate development and construction companies. it is also worth pointing out that households and non - financial corporations are changing the composition of their savings in response to the very low interest rate environment, meaning that bank deposits have declined while units in investment funds have increased significantly. bis central bankers ’ speeches spanish banks ’ attributed profits in 2014 increased by close to 34 %, continuing the recovery initiated in 2013. despite the backdrop of declining credit and low interest rates, net interest income rose by almost 5 % owing to