EconomicOutlook andtheRoleofthe Austrian FiscalAdvisory Council · 2015. 2. 11. · EU...
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Prof. Dr. Bernhard Felderer President of the Austrian Fiscal Advisory Council JVI, 5 th of December 2014 Economic Outlook and the Role of the Austrian Fiscal Advisory Council www.fiskalrat.at
Transcript of EconomicOutlook andtheRoleofthe Austrian FiscalAdvisory Council · 2015. 2. 11. · EU...
Prof.Dr.BernhardFeldererPresident of the AustrianFiscal AdvisoryCouncilJVI,5th of December 2014
Economic Outlook and the Role of theAustrian Fiscal Advisory Council
www.fiskalrat.at
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InternationalEconomy
Current economic outlook
Source:sonofadud.com
Global growth projectionsGrowth of real GDP, in %
3Source:OECD.
‐1.4
‐0.4
0.3 0.3 0.4 0.4 0.50.8 0.8
1.3 1.5
2.2
3
7.3
0.8
0.2
1.5
0
0.8 0.8 0.9 1.1
2.3
1.7
1.1
3.12.7
7.1
‐2
‐1
0
1
2
3
4
5
6
7
8
annu
al growth in
%
2014 2015
4
Fiscal policy
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
in m
illion Eu
ro
gross fixed capital formation (total) gross fixed capital formation (public sector)
5Source:StatistikAustria.
Share of public investments relatively lowGross fixed capital formation in Austria, total and public sector
share of public sector: 10‐15%
6Souce:Eurostat,Economica.
Public debt 2008‐2013
4.9 7.5 11.3 13.3 18.5 18.525.0 25.2
34.7 36.0 37.6
59.2 60.0 63.9 69.0 71.378.5
93.6105.4110.3
128.6133.8
153.2
187.1189.4
225.9
‐26
‐21
‐16
‐11
‐6
‐1
4
9
0
50
100
150
200
250
real growth 200
8‐20
13 in
%
Chan
ge of p
ublic deb
t in %
growth of public debt 2008‐2013 in %
growth reales GDP 2008‐2013 in %
7
TheECBatthe endof its possibilities?Canwe avoid deflation by quantitativeeasing?
Monetary policy
8Source:ECB.
Cheap money does not reach real economyLoans to non‐financial corporations, monthly change rates to previous year in %
‐15
‐10
‐5
0
5
10
15
20
25
30
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
chan
ge in
% to
previou
s year
Eurozone Germany Greece Spain Portugal
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Investments not at level before crisisReal gross fixed capital formation, seasonally and working day adjusted data
Reduction in 2nd quarter 2014
90.0
95.0
100.0
105.0
110.0
115.0
120.020
04Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
2013
Q1
2013
Q3
2014
Q1
Inde
x 20
05 = 100
Eurozone Austria Germany FranceSource:Eurostat.
10
Exchangeratesandoilpriceasapossiblegrowthaid
Short run perspectives
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Souce:OeNB.
Euro exchange rates (1)
1.2
1.25
1.3
1.35
1.4
1.45
1.5
10/25/20
10
2/25
/201
1
6/25
/201
1
10/25/20
11
2/25
/201
2
6/25
/201
2
10/25/20
12
2/25
/201
3
6/25
/201
3
10/25/20
13
2/25
/201
4
6/25
/201
4
10/25/20
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exchan
ge ra
te to
Euro
EUR‐USD
0.7
0.75
0.8
0.85
0.9
0.95
10/25/20
10
2/25
/201
1
6/25
/201
1
10/25/20
11
2/25
/201
2
6/25
/201
2
10/25/20
12
2/25
/201
3
6/25
/201
3
10/25/20
13
2/25
/201
4
6/25
/201
4
10/25/20
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exchan
ge ra
te to
Euro
EUR‐GBP
Depreciation since February 2014: ‐9,7% Depreciation since beginning of 2014: ‐4,5%
Depreciation of the Euro may be a chance to foster exports!
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Souce:ThomsonReuters,EIA.
Decreasing oil price Spot price, dollar per Barrel, since January 2014
70
75
80
85
90
95
100
105
110
115
1201/2/2014
1/16/2014
1/30/2014
2/13/2014
2/27/2014
3/13/2014
3/27/2014
4/10/2014
4/24/2014
5/8/2014
5/22/2014
6/5/2014
6/19/2014
7/3/2014
7/17/2014
7/31/2014
8/14/2014
8/28/2014
9/11/2014
9/25/2014
10/9/2014
10/23/2014
11/6/2014
11/20/2014
USD
per barrel
WTI Brent
13Source:ifo.
ifo‐IndexPositive expectations after negative trend of six months
ifo Business Climate for German trade and industry; November 2014
90
95
100
105
110
115
120
125
01/
2010
03/
2010
05/
2010
07/
2010
09/
2010
11/
2010
01/
2011
03/
2011
05/
2011
07/
2011
09/
2011
11/
2011
01/
2012
03/
2012
05/
2012
07/
2012
09/
2012
11/
2012
01/
2013
03/
2013
05/
2013
07/
2013
09/
2013
11/
2013
01/
2014
03/
2014
05/
2014
07/
2014
09/
2014
11/
2014
Business Situation Business Expectations
2005 = 100 (seasonally adjusted)
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Structuralreformsareunavoidable
Long run perspectives
Long‐term population growth
15Source: United Nation.Medium variant.
0
2
4
6
8
10
12
1960 1990 2010 2040 2070 2100
in billions
Africa Asia Europe Latin America and the Caribbean Northern America Rest
16
Source:OECD(2012).
Long‐term potential outputGrowth contribution, Period 2011‐2060
workcapitalhuman capitalproductivityannual growth of real potential output
The Roleof theAustrian FiscalAdvisory Council
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Austrian Fiscal Institutional Framework
AustrianInstituteofEconomic Research
Ministry of Finance+Governing Bodies of Statesand Municipalities
Planning and execution of fiscal policy
AustrianTreasury Courtof AuditFiscal AdvisoryCouncil
• Macroeconomic forecasts forthe Ministry of Finance
• Research
• Ex‐post auditofthefinancesofthefederation,states,certainmunicipalitiesandlegalentities
• Ex‐post opiniononnon‐compliancewithnational fiscalrulesandconsequentsanctions(AustrianStabilityPact2012)
• OperationalDebtManagement
AdviceandrecommendationstotheMinistryofFinanceandNationalCouncil(withrespectto/basedon):• Fiscalmonitoring(sustainabilityandqualityofpublicfinance):currentsituationandoutlook
• AssessmentofcompliancewithEUfiscalrules
Statistics Austria
• Ex‐post data provision,necessary forthe calculation and assessment ofcompliance with national fiscal rules(GDP,budget balances,debt,etc.)
ParliamentaryBudgetOffice
• Analyticalsupport to the NationalCouncilinfiscal matters
NationalCouncil(Parliament)
Approval and oversight of fiscal policy
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fiscal „watch‐dog“fordomestic fiscal rules
Main Elements of the Austrian FiscalFramework
Domestic (EU)fiscal rules
Budgetaryprocedures
Austrian Fiscal Advisory Council
Multi‐annualbudgetary planning
• AustrianStability Pact2012:EU‐rules to alllevelsof government (nominalandstructural budget rule,debtrule,expenditure rule)
• Differentstructural deficittargets,starting 2017:(‐0,45%of GDPintotal)
• ‐0,35%of GDP:centralgovernment
• ‐0,1%of GDP:state and localgovernment
• Correctionmechanism,starting2017:max.deviation:1,6%ofGDP
• Federal medium‐termexpenditure framework (4years)for the adoption inParliament
• Mid‐termbudget plans of stategovernments
• Guarantee limits (central,localand state government)
• Preparation,approval andimplementation of budgetplans (i.g.FederalBudgetLaw)
• Coordinationcommittees betweensubsectors
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The role of fiscal councils
Politicalbusinesscycles Short‐sightedness,
pro‐cyclicalityingoodtimes Moralhazard/freeriders Informationalasymmetry/lack
oftransparency/fiscalillusion Biasedofficialforecasts
Fiscalrules Improvingpolicymakers’
incentivesbyraisingreputationalandelectoralcostsofunsoundpolicies
Raisingpublicawarenesstoaddressfiscalillusionandcontributetoastabilityculture
Independentforecasts/assessmentsandanalyses
Closing“technicalloopholes”throughindependentexpertise
Deficit‐biasoffiscalpolicy,dueto/manifestedby: Possiblewaysforward:
FiscalCouncils=importantindependent“watch‐dogs”tostrenghten fiscaldisciplin
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FC within European fiscal governance
EUSix‐pack (2nd updateoftheStabilityandGrowthPact,‘SGP3.0’)
Effectiveandtimelysurveillanceoffiscalrulesbyindependentbody.
Two‐pack(evenstrongersurveillanceforEAMS)
Independentorendorsedmacroeconomicandfiscalforecasts
SurveillanceofEU/nationalnumericalfiscalrulesbyindependentbody
FiscalCompact(Articles3‐8oftheTreatyonStability,CoordinationandGovernance;transpositionofSGPintonationalrules)
Surveillanceofnationalnumericalfiscalrulesbyindependentbody
IndependentFiscalInstitutions(IFI):acompulsoryelementinthe‘new’Europeanfiscalgovernanceframework
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MainElementsof SGP:apreventive and acorrective arm
Key elements of EU fiscal rules (simplified)
Medium‐TermObjective (MTO):budget balance,adjusted for the effect of the business cycle („cyclicallyadjusted balance“)and excluding one‐offmeasures („structuralbalance“) level:min.‐0.5%of GDPfor EAMS adjustment path towards it:min.0.5%of GDPp.a.
Budgetbalance:min.‐3%of GDP
Publicdebt:max.60%of GDP,or diminishing atasatisfactory pace
Expenditure benchmark:realgrowth rateof public expenditure*<medium‐termpotentialGDPgrowth (*excluding interest payments and unemployment related expenditure and expenditureoffset by discretionary revenue measures)
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Austrian Fiscal Advisory Council: Tasks
ReflectingEuropeanfiscalframework(‘new’‐IFI‐tasks,asof1.11.2013):
Monitorcompliancewithnational/EUfiscalrulesinatimelymanner Providerecommendationsonmedium‐termbudgetobjectives
Assesscurrentfiscalsituationincludingoutlook Analyzesustainabilityandthequalityoffiscalpolicies Analyzeeconomiceffectsofpublicdebt Writtenrecommendationsonfiscalpolicies Ex‐postdocumentation/evaluation offiscalpolicy Shapepublicopinion[fiscalpolicyissues]
Reflectingnationalco‐ordinationandadvisorybody(pre‐IFI‐tasks):
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AT Fiscal Advisory Council: Organization
Providesanalyticaland administrativesupporttoFISK 5economists,½researchassistant/statistician,½secretary StaffprovidedbyandcostsbornebytheOesterreichische
Nationalbank
OfficeoftheFiscalAdvisoryCouncil
15members,independentfiscalexpertsappointedfor6yearsby:
Members withvotingrights:Federalgovernment(6,includingthePresident),AustrianFederalEconomicChamberinagreementwithChambersofAgriculture(3),AustrianFederalChamberofLabor(3).
Memberswithoutvotingrights:AustrianAssociationofMunicipalities(1),AssociationofAustrianTownsandCities(1),ConferenceofProvincialGovernors(1);members withadvisorycapacity: theOesterreichischeNationalbank(1)andtheParliamentaryBudgetOffice(1).
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FISK products
FiscalRulesComplianceReport:publishedinMay;evaluatescomplianceofATStabilityProgrammewithEuropean/nationalfiscalrules andresultsfromthe FISK‐forecasting‐exercise.
ReportontheFISK‐BudgetaryOutlookfortandt+1:publishedinDecember;evaluatesATbudgetarydevelopmentsoftandt+1basedonFISK‐forecasting‐exercise.
FISKAnnualReport:publishedinJuly;ex‐postdocumentationandevaluationoffiscalpolicy andmainfiscalpolicyindicators(deficit,debt,theirstructure,etc.),includingextra‐budgetaryliabilities.
Recommendations:publishedbi‐annuallyinJulyandDecember;includesamacroeconomicoutlook.
Other (ad‐hoc)analysesandpositiondocuments(e.g.pressreleases).
Alreadyfinished/scheduledproducts:
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FISK‐Assessment – Austria
Discretionary measures characterize fiscalconsolidation path since 2011: Changing contributions of measures onthe expenditure and ontherevenue side (relationship 2014:40%to 60%;2018:55%to 45%).
Latest consolidation efforts of early 2014were mostly revenue‐sidemeasures
Missing data and explanationsmake checks sometimes difficult
Bankingrescue measureswere high(budgetary impactup to 4,1bn (2014)p.a.)
Sustainability andquality ofATpublicfinancesshouldbesupportedbystructuralreforms
MTOwillhave to be met for about 12years to reach debt‐targetof 60%of GDPinAustria (nom.GDP‐growth of +3,4%p.a.) 26
Fiscal performance 2014: public debt
+6+16
-6
+32 +25+24 +26
+27+9 +11
+60
+22 +30+30 +31
+63
+42+19
+53+87
+59+32
+72
+62
9,923,0
35,340,3 41,3
54,159,8
69,7 71,0 74,5 82,2 87,0 88,1 94,5 95,5 98,1 105,6 105,8 107,5 110,5
127,7132,2
175,5
245,1
-20
0
20
40
60
80
100
120
140
160
180
200
220
240
260
Change of debt ratio 2008 to 2014General Government Debt 2007 in % of GDP
Source: European Commission (November 2014); IMF (Japan, USA; November 2014), national data (Switzerland; September 2014) and own calculations.
General Government Gross Debt 2014 in % of GDP
% of GDP
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Thank you for your attention!
Contact:
Usefullinks:
Büro desFiskalrates /OfficeoftheFiscalAdvisoryCouncil
c/oOesterreichische NationalbankOtto‐Wagner‐Platz 3|1090ViennaP.O.Box61|A‐1011Vienna,AustriaEmail:[email protected]
www.fiskalrat.at
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm
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