Source: Eurostat, IMF, ECB, OECD

Transcription

1 Is a Fiscal and Political Union Euro s Future? Past, Present and Future of EMU Institute for Advanced Studies Vienna June 25, 2012 Juraj Sipko

2 Introduction Historical Overview Present Stage of Development Future Development Challenges Slovakia and EMU Conclusion

3 Historical Overview Why was the EMU created? In reality, is convergence or divergence process? What are the main obstacles in the functioning of the EMU? How to solve the present situation? Who is responsible for the sustainability of the fiscal policy? Why were some countries able to manage fiscal and external balances? What is an imperative for eurozone countries to put economies on sustainable path?

4 Historical Overview

5 Interconnection Business Cycle Source: Eurostat, IMF, ECB, OECD

6 GDP - Market Prices in millions of EUR Germany Spain Italy Sweden Greece France Portugal Japan Source: Eurostat, IMF, ECB, OECD

7 Public Deficit Sweden Greece Germany France Italy Portugal Spain Japan United States -20 Source: Eurostat, IMF, ECB, OECD

8 Primary Fiscal Balance Sweden Greece Germany France Italy Portugal Spain United States Japan -12 Source: Eurostat, IMF, ECB, OECD

9 Public Debt Sweden Greece Germany France Italy Portugal Spain United States Japan Source: Eurostat, IMF, ECB, OECD

10 Current Account Sweden Greece Spain France Italy Portugal Japan Germany United States Source: Eurostat, IMF, ECB, OECD

11 Loss of Competitiveness, resulting in low-growth and a high current account deficit 6 4 Unit Labor Cost Change (Total Economy), (percent change) Unit Labor Cost Change (Manufacturing), (percent change) Wages Productivity 1/ ULC Wages Productivity 1/ ULC / Negative = increase in labor productivity Source: IMF

12 Integrated Europe

13 Interconections Source: Eurostat, IMF, ECB, OECD

14 Present Development

15 Sovereign Risks 2008 Source: Eurostat, IMF, ECB, OECD

16 Sovereign Risks 2009 Source: Eurostat, IMF, ECB, OECD

17 Sovereign Risks 2010 Source: Eurostat, IMF, ECB, OECD

18 Sovereign Risks 2011 Source: Eurostat, IMF, ECB, OECD

19 Challenges

20 Current Account Deficit/Surplus Source: Eurostat, IMF, ECB, OECD

21 Reform Gaps Source: Eurostat, IMF, ECB, OECD

22 Fiscal Deficit Source: Eurostat, IMF, ECB, OECD

23 General Gov. Structural Balance Source: Eurostat, IMF, ECB, OECD

24 Slovakia and EMU

25 Macroeconomic Indicators % GDP % Real GDP Fiscal deficit Current account Inflation (HICP) Source: ECB, EC, NBS, MFSR

26 Impact of the Crisis on CEE SI SK BG CZ EE LV LT HU PL RO EÚ Annual GDP growth (in %) ,5 6,4 0,8 6,0 3,2-3,6-4,6 3,0 0,5 4,8 7,1 0, ,4-2,6-4,0-1,6-2,7-10,3-13,1-11,0-6,3-1,4-4,0-4, ,7 0,7-0,1-0,1 0,3-0,8-3,2-4,7-0,3 0,8 0,0-0,1 Sources: Spring 2009 Economic Forecast, EC

27 The Best Export Share Export market shares (5 years % change) Threshold: -6% 32,1 Export market shares (5 years % change) 0 2,3 0-15,7-8,3-12, ,9-19, ,7-8,1-15,1-9,5-5,9-18,8 Sources: Eurostat data

28 The Lowest Private Sector Debt Private sector debt (% of GDP) Threshold: 160% Private sector debt (% of GDP) 316,3 288,3 233,9 220,1 259,9 209,2 218,7 247,4 136, ,8 160,7 134,9 160,7 128,2 172,4 74,2 Source: Eurostat data

29 Low Level of Public Debt 250% 200% Sovereign debt in % of GDP 150% 100% 50% 0% AT CZ SK HU PL RO UA ES CH FR DE CN IN RU ID JP US Sources: OeNB, EIU

30 Unit Labor Costs e Feb Jan e EU15 22,9 22,8 23,6 24,6 25,6 26,3 27,0 27,7 28,3 28,3 V4 average 3,7 4,2 4,6 4,7 5,0 5,5 6,0 6,8 7,5 6,9 Slovakia 3,0 3,1 3,5 4,0 4,4 4,6 5,2 6,3 7,0 7,1 Slovakia, % in average EU15 Slovakia, % in average V4 13,2 13,6 14,8 16,2 17,1 17,6 19,3 22,8 24,8 24,9 82,4 74,0 76,3 85,3 88,0 83,5 87,4 93,5 93,0 101,6 Source: European Commission, Eurostat data

31 Slovakia Has the Best Rating in the Region Slovakia Czech Republic Standard & Poor s Moody s Fitch Rating R&I JCR A+ Stable A1 Stable A+ Stable A Stable A+ Stable outlook outlook outlook outlook outlook A Stable outlook A1 Stable outlook A+ Stable outlook A Stable outlook A Stable outlook Poland A- Stable outlook A2 Stable outlook A- Stable outlook A- Stable outlook A- Stable outlook Hungary BBB- Negative outlook Baa1 Negative outlook BBB Negative outlook BBB+ Negative outlook BBB+ Negative outlook Source: Standard & Poor s, Moody s, Fitch Rating, R&I, JCR

32 Future of EMU

33 EMU is at a Critical Juncture Financial Stability Fiscal Sustainability Social Stability Strong - Sustained - Balanced Growth Source: IMF

34 Conclusion

35 Source: Eurostat, IMF, ECB, OECD From the US Germany France 79% Greece 153% 89% From the US Ireland 109% Italy 123% Britain 81% Spain 79% 112% Portugal Japan 233% United States To Germany 100% To France

36 Strengthening Economic Governance Financial Fiscal Crisis Resolution Structural ECB/ ESCB European Systemic Risk Board European Supervisory Authorities Resolution Harmonized national frameworks Deposit insurance Colleges European Semester SGP 3.0 Prevention Stronger Center Minimum Standards for National Fiscal Institutions European Financial Stability Facility & Mechanism European Stability Mechanism EU2020 Excessive Imbalances Procedure Source: IMF

37 Thank you for your attention