Euro area economic situation and the foundations for growth

Transcription

1 Euro area economic situation and the foundations for growth Presentation by Mario Draghi President of the European Central Bank at the Euro Summit Brussels, 1 March 1

2 Economic situation Euro area real GDP (annual % growth rate) Latest data: 1Q. Sources: Eurostat.

3 Economic situation Euro area unemployment (% of labour force) 18.. January 7 January euro area (1) euro area (7) 8 Latest data: January 1 (December 1 for Greece and Estonia). Source: Eurostat.

4 External imbalances % 1% Current account balance (% of GDP) AT BE DE LU NL ES FR GR IE IT PT Surplus Deficit % 1% 1% 1% % % % % % % 1% 1% 1% 1% % % Note: For improved readability, this and subsequent charts only show the countries listed above and do not include FI, EE, SK, SI, CY, MT. Countries are assigned to "External surplus/deficit" group if they had a current account surplus/deficit in 7 (the last pre-crisis year). Surplus countries in blue, deficit countries in red. Annual data (smoothed lines). Source: AMECO.

5 Credit situation Bank credit to firms (annual rate of growth) euro area DE ES FR IT 8 8 1/1 7/1 1/11 7/11 1/1 7/1 1/1 Notes: MFI loans to non-financial corporations adjusted for loan sales and securitisation. -month moving average. Latest observation January 1. Source: ECB.

6 Fiscal situation Government deficits (1) (% of GDP) Deficit > % % > Deficit > % Deficit < % 1 1 General government debt (1) (% of GDP) 1 Debt > 9% 9% > Debt > % Debt < % 1 1 Maastricht criterion 8 Maastricht criterion Note: Budget balance is corrected for capital injections into banks. Source: European Commission 1 Winter Economic Forecast.

7 Economic situation Euro area real GDP (annual % growth rate) Net exports Domestic demand GDP -.. ECB projection range Latest data: 1Q. Sources: Eurostat, ECB, EC. 7

8 Foundations for growth Where does growth come from? - strengthening of global demand - supportive monetary policy anchoring price stability -and restoring : Confidence Credit Competitiveness 8

9 The competitiveness problem Wage and productivity developments Compensation Productivity (deficit countries) (surplus countries) Productivity (deficit countries) Productivity (surplus countries) Note: 1999 =. Total economy. Productivity is defined as real GDP per employee. GDP-weighted average by country group. Annual data (smoothed lines). Source: AMECO. 9

10 Country perspective (selection) Wage and productivity developments Austria Germany Portugal Productivity Productivity 1 1 Productivity France Spain Italy Productivity 1 1 Productivity 1 1 Productivity Note: 1999 =. Total economy. Productivity is defined as real GDP per employee. Annual data (smoothed lines). Source: AMECO

11 Profitability problems Business margins (%, national accounts) Negotiated wages and employment Ext. surplus group Ext. deficit group Net operating surplus / value added for nonfinancial corporations (-quarter averages) Latest observation: 1Q. Sources: Eurostat, ECB. Right-hand chart: Note: 1999 =. GDP-weighted average by country group. Due to data availability, External surplus group does not include Luxembourg, and External deficit group does not include Greece and Ireland. Annual data (smoothed lines). Source: Eurostat Negotiated wages External surplus countries Employment External surplus countries Negotiated wages External deficit countries Employment External deficit countries

12 Confidence returning 8 Corporate bond yields (percentage points) First yr LTRO OMT announced 8 7 Government bond yields (percentage points) OMT announced 1 7 Return of confidence 7. Return of confidence Medium grade bonds Jul 11 Oct 11 Jan 1 Apr 1 Jul 1 Oct 1 Jan 1 Note: EMU all maturities. Monthly data; Latest data: February 1. Sources: BofA Merril Lynch, Datastream and ECB calculations.. Spain Portugal (rhs) Italy Ireland (rhs) Apr 1 Jun 1 Aug 1 Oct 1 Dec 1 Feb 1 Note: -month moving average of monthly data. Latest data: February 1. Sources: Thomson Reuters and ECB calculations. 1

13 Problems for smaller firms 7 Interest rate on new loans to firms (Loans up to EUR 1 million to firms, percent per annum) 7 Germany Spain France Italy Source: ECB. 1

14 Fiscal progress Government deficits in 9 and 1 (% of GDP) Note: Budget balance is corrected for capital injections into banks. Source: European Commission's winter 1 economic forecast and ESCB. 1

15 Conclusions 1. Review of product and labour markets to see whether they are compatible with participation in monetary union. Reform contracts for countries with pressing competitiveness problems.. Full implementation of Single Market legislation 1