BBVA in 2012

Environmentand BBVA positioningThe economic backgroundIn 2012The global economy has grown just over 3%, a year-on-year rate which is slightly lower thanthe average for the last three decades (3.5%). This slowdown in world growth is largely due tofurther flaring up of financial tensions in Europe. The rest of the slowdown has been caused bythe contagion from Europe to other geographical areas, limited support from demand policies inemerging markets and uncertainties about how to define such policies in the United States.The slowdown hasintensified in 201212 Many events have occurred in 2012 in Europe which have triggered unease in the markets.Firstly, uncertainties about how to reach fiscal austerity targets without hampering growth.Secondly, uncertainties arising from the state of the financial system in certain countries, whichis subject to pressure due to lack of growth and suspicion spreading about the solvency ofthe public sector. Lastly, the degree of commitment of certain countries toward the commonEuropean project, which at some points during 2012 has prompted fears of a break-up of theeuro (fears which were later dispelled).Europe is on theroad toward closereconomic andmonetary unionHowever, 2012 has also been a year marked by essential steps taken to resolve the financial crisisin Europe. The commitment toward the euro has been reinforced, once the Greek elections ledto the formation of a government which took a responsible view of the adjustments neededfor it to remain in the common monetary area. Secondly, peripheral countries have carried outmajor structural reforms. Thirdly, significant process has been made in restructuring the financialsystems which were hardest hit by the crisis that began in late 2008 -such as Spain’s- with theapproval of a credit facility for the recapitalization of the most vulnerable institutions. Lastly,Europe has also worked on its governance, with the establishment of a fiscal agreement, thesetting-up of the European Stability Mechanism (ESM), the first steps taken toward bankingunion, and (a decisive factor) the commitment of the ECB to do whatever is necessary toEnvironment and BBVA positioning35