Euro area economic situation and the foundations for growth Euro Summit 14 March 2013.
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Euro area economic situation and the foundations for growth Euro Summit 14 March 2013
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Transcript of Euro area economic situation and the foundations for growth Euro Summit 14 March 2013.
Euro area economic situation and the
foundations for growth
Euro Summit14 March 2013
2
Latest data: 2012Q4. Sources: Eurostat.
Euro area real GDP (annual % growth rate)
Economic situation
-6
-5
-4
-3
-2
-1
0
1
2
3
4
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2007 2008 2009 2010 2011 2012
3
Euro area unemployment(% of labour force)
Economic situation
0
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20January 2007 January 2013
euro area (2013)
euro area (2007)
26.4 26.2
Latest data: January 2013 (December 2012 for Greece and Estonia).Source: Eurostat.
4
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 2007 (the last pre-crisis year). “Surplus” countries in blue, “deficit” countries in red. Annual data (smoothed lines). Source: AMECO.
External imbalances
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
AT BE DE LU NL ES FR
GR IE IT PT Surplus Deficit
Current account balance
(% of GDP)
5
Bank credit to firms(annual rate of growth)
Notes: MFI loans to non-financial corporations adjusted for loan sales and securitisation. 3-month moving average. Latest observation January 2013. Source: ECB.
Credit situation
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
01/2010 07/2010 01/2011 07/2011 01/2012 07/2012 01/2013
euro area DE ES FR IT
6
Note: Budget balance is corrected for capital injections into banks.Source: European Commission 2013 Winter Economic Forecast.
General government debt (2012)(% of GDP)
Government deficits (2012)(% of GDP)
Fiscal situation
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140Debt > 90% 90% > Debt > 60% Debt < 60%
Maastricht criterion
162
0
1
2
3
4
5
6
0
1
2
3
4
5
6Deficit > 3% 3% > Deficit > 2% Deficit < 2%
Maastricht criterion
7.5 6.7
-0.2
6.7
7
Latest data: 2012Q4. Sources: Eurostat, ECB, EC.
Euro area real GDP (annual % growth rate)
Economic situation
-6
-5
-4
-3
-2
-1
0
1
2
3
4
-6
-5
-4
-3
-2
-1
0
1
2
3
4
2007 2008 2009 2010 2011 2012 2013 2014
Net exports Domestic demand GDP
-6.04.0
2…2…2…2…2…2…2…2…ECB projection range
888
Where does growth come from?
- strengthening of global demand
- supportive monetary policy anchoring price stability
- and restoring :
Confidence Credit
Competitiveness
Foundations for growth
9
Wage and productivity developments
Note: 1999 = 100. Total economy. Productivity is defined as real GDP per employee. GDP-weighted average by country group. Annual data (smoothed lines). Source: AMECO.
Compensation Productivity
The competitiveness problem
100
105
110
115
120
125
130
135
140
145
100
105
110
115
120
125
130
135
140
145Compensation per employee(deficit countries)Compensation per employee(surplus countries)
100
102
104
106
108
110
112
114
116
118
120
122
100
102
104
106
108
110
112
114
116
118
120
122Productivity(deficit countries)Productivity(surplus countries)
Austria
10
Wage and productivity developments
Note: 1999 = 100. Total economy. Productivity is defined as real GDP per employee. Annual data (smoothed lines). Source: AMECO.
Germany
Spain ItalyFrance
Portugal
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
Country perspective (selection)
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
100
105
110
115
120
125
130
135
140
145
150
100
105
110
115
120
125
130
135
140
145
150
1999 2001 2003 2005 2007 2009 2011
Compensation per employee
Productivity
11
Business margins(%, national accounts)
20
22
24
26
28
30
32
34
20
22
24
26
28
30
32
34
Ext. surplus group
Ext. deficit group
Profitability problems
Negotiated wages and employment
94
96
98
100
102
104
106
108
110
94
96
98
100
102
104
106
108
110
2008 2009 2010 2011 2012
94942008
Negotiated wages - External surplus countriesEmployment - External surplus countriesNegotiated wages - External deficit countriesEmployment - External deficit countries
Net operating surplus / value added for nonfinancial corporations (4-quarter averages)Latest observation: 2012Q3. Sources: Eurostat, ECB. Right-hand chart:Note: 1999 = 100. 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.
12
Corporate bond yields(percentage points)
Note: EMU all maturities. Monthly data; Latest data: February 2013.Sources: BofA Merril Lynch, Datastream and ECB calculations.
Government bond yields(percentage points)
Note: 3-month moving average of monthly data. Latest data: February 2013.Sources: Thomson Reuters and ECB calculations.
Confidence returning
3
4
5
6
7
8
3
4
5
6
7
8
Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
Medium-grade bonds
First 3-yr LTRO OMT announced
Return of confidence
3
5
7
9
11
13
15
4
4.5
5
5.5
6
6.5
7
Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13
Spain ItalyPortugal (rhs) Ireland (rhs)
OMT announced
Return of confidence
13
Interest rate on new loans to firms (Loans up to EUR 1 million to firms, percent per annum)
Source: ECB.
Problems for smaller firms
2
3
4
5
6
7
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013
Germany Spain France Italy
14
Government deficits in 2009 and 2012(% of GDP)
Note: Budget balance is corrected for capital injections into banks.Source: European Commission's winter 2013 economic forecast and ESCB.
0
2
4
6
8
10
12
0
2
4
6
8
10
12
2009 2012
15.6
Fiscal progress
-0.2
Conclusions
1. Review of product and labour markets to see whether they are compatible with participation in monetary union
2. Reform contracts for countries with pressing competitiveness problems.
3. Full implementation of Single Market legislation
15
