“China will have to change its production model”

The Chinese economy continues to fail to meet analysts' expectations after its expected reopening: the country’s GDP expanded by only 0.8 percent, and although growth was 5.5 percent in the first half of the year, it falls short of what was initially expected.

Alberto Matellán, chief economist at MAPFRE Inversión, explains that, although the GDP figure has been disappointing, the difference between the actual and expected data is smaller than what we’ve seen in other regions, such as Europe.

"This lower growth has different origins, such as reduced exports or problems in the real estate sector, but there is another contributing factor that doesn’t get enough attention: the change in global production chains, which are moving away from China, "he argues.

Investors will also be paying attention in the coming days to both the European Central Bank (ECB) and Federal Reserve (Fed) meetings, where analysts anticipate a new rate hike this month, which would be the last or second last.

For Matellán, what’s really important is whether this is going to be the last rise or not and, although the price of money is close to its peak, what he does rule out is that we will see a rate cut later this year.

Inflation will continue to moderate in the coming months, also due to the base effect. "The outlook is for it to continue moderating. The question is whether it will do so enough to reach the level of stability, set at 2 percent," he explains.

In the face of the macroeconomic situation, ratings agencies such as Moody's and S&P have warned that payment defaults and bankruptcies will soar to 10% in their most extreme scenario, raising them to levels not seen since 2009. As per their analysis, the most solvent companies will pull through, but they will have to keep an eye on the so-called high yields.

The chief economist at MAPFRE Inversión explains that it’s normal for payments to increase when a country's economic situation worsens and adds that this forecast isn’t over the top either, but rather “falls within the normal.”

A good earnings season

Matellán anticipates a good season of results despite the worsening of the macroeconomic situation, which means investors will scrutinize accounts more than usual. "In general, the data we have point to good results. What we’re seeing is that, although the macro figures are slowing down, enterprise earnings are holding up quite well. It doesn't seem like there will be any serious scares," he says.

The only surprises could occur in the sectors most affected by increases, such as real estate, which is suffering in both Spain and other countries.

Elections have little impact on markets

MAPFRE Inversión’s chief economist explains that national elections have little impact on the markets. "If the institutional context is solid, elections don’t usually affect things that much. Judicial security is more important. Governance changes don’t cause major economic changes, because some stability is expected to be maintained," he explained.