ECB President Mario Draghi presented this on growth last week, but I never saw it reported in media.

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, 14 March 2013

2. Economic situation
Euro area real GDP
(annual % growth rate)
4 4
3 3
2 2
1 1
0 0
‐1 ‐1
‐2 ‐2
‐3 ‐3
‐4 ‐4
‐5 ‐5
‐6 ‐6
2007 2008 2009 2010 2011 2012
Latest data: 2012Q4. Sources: Eurostat.
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3. Economic situation
Euro area unemployment
(% of labour force)
26.4 26.2
20 20
January 2007 January 2013
18 18
16 16
14 14
euro area (2013)
12 12
10 10
euro area (2007)
8 8
6 6
4 4
2 2
0 0
Latest data: January 2013 (December 2012 for Greece and Estonia).
Source: Eurostat.
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4. External imbalances
Current account balance
(% of GDP)
20% 20%
AT BE DE LU NL ES FR
15% GR IE IT PT Surplus Deficit 15%
10% 10%
5% 5%
0% 0%
‐5% ‐5%
‐10% ‐10%
‐15% ‐15%
‐20% ‐20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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.
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5. Credit situation
Bank credit to firms
(annual rate of growth)
6 6
4 4
2 2
0 0
‐2 ‐2
‐4 ‐4
‐6 ‐6
euro area DE ES FR IT
‐8 ‐8
01/2010 07/2010 01/2011 07/2011 01/2012 07/2012 01/2013
Notes: MFI loans to non-financial corporations adjusted for loan sales and securitisation. 3-month moving average.
Latest observation January 2013. Source: ECB.
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6. Fiscal situation
Government deficits (2012) General government debt (2012)
(% of GDP) (% of GDP)
7.5 6.7 6.7 162
6 6 140 140
Deficit > 3% 3% > Deficit > 2% Deficit < 2% Debt > 90% 90% > Debt > 60% Debt < 60%
5 5 120 120
100 100
4 4
Maastricht
80 80
criterion
3 3
Maastricht criterion
60 60
2 2
40 40
1 1 20 20
‐0.2
0 0 0 0
Note: Budget balance is corrected for capital injections into banks.
Source: European Commission 2013 Winter Economic Forecast.
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7. Economic situation
Euro area real GDP
(annual % growth rate)
4 4
3 3
2 2
1 1
0 0
‐1 ‐1
‐2 ‐2
‐3 ‐3
Net exports Domestic demand GDP
‐4 ‐4
4.0
-6.0
ECB projection range
2222
2222
‐5 ‐5
‐6 ‐6
2007 2008 2009 2010 2011 2012 2013 2014
Latest data: 2012Q4. Sources: Eurostat, ECB, EC.
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8. Foundations for growth
Where does growth come from?
- strengthening of global demand
- supportive monetary policy anchoring price stability
- and restoring :
Confidence Competitiveness
Credit
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9. The competitiveness problem
Wage and productivity developments
Compensation Productivity
145 145 122 122
Compensation per employee Productivity
140 140 120 120
(deficit countries) (deficit countries)
118 118
135 Compensation per employee 135 Productivity
116 116
(surplus countries) (surplus countries)
130 130
114 114
125 125 112 112
120 120 110 110
108 108
115 115
106 106
110 110
104 104
105 105 102 102
100 100 100 100
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.
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10. Country perspective (selection)
Wage and productivity developments
Austria Germany Portugal
150 150 150 150 150 150
Compensation per employee Compensation per employee Compensation per employee
145 145 145 145 145 145
Productivity Productivity Productivity
140 140 140 140 140 140
135 135 135 135 135 135
130 130 130 130 130 130
125 125
125 125 125 125
120 120
120 120 120 120
115 115
115 115 115 115
110 110
110 110 110 110
105 105
105 105 105 105
100 100
100 100 100 100 1999 2001 2003 2005 2007 2009 2011
1999 2001 2003 2005 2007 2009 2011 1999 2001 2003 2005 2007 2009 2011
France Spain Italy
150 150 150 150 150 150
Compensation per employee Compensation per employee Compensation per employee
145 145 145 145 145 145
140
Productivity 140 Productivity Productivity
140 140 140 140
135 135 135 135 135 135
130 130 130 130 130 130
125 125 125 125
125 125
120 120
120 120 120 120
115 115
115 115 115 115
110 110
110 110 110 110
105 105
105 105 105 105
100 100
1999 2001 2003 2005 2007 2009 2011 100 100 100 100
1999 2001 2003 2005 2007 2009 2011 1999 2001 2003 2005 2007 2009 2011
Note: 1999 = 100. Total economy. Productivity is defined as real GDP per employee. Annual data (smoothed lines). Source: AMECO.
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11. Profitability problems
Business margins Negotiated wages and employment
(%, national accounts)
34 34 110 110
Ext. surplus group
32 32 108 108
Ext. deficit group
106 106
30 30
104 104
28 28
102 102
26 26
100 100
24 24
98 98
22 22 96 96
20 20 94 94
2008 2009 2010 2011 2012
Net operating surplus / value added for nonfinancial corporations (4-quarter averages) Negotiated wages ‐ External surplus countries
Latest observation: 2012Q3. Sources: Eurostat, ECB.
Right-hand chart: Employment ‐ External surplus countries
Note: 1999 = 100. GDP-weighted average by country group. Due to data availability, Negotiated wages ‐ External deficit countries
“External surplus” group does not include Luxembourg, and “External deficit” group
does not include Greece and Ireland. Annual data (smoothed lines). Employment ‐ External deficit countries 94 94
Source: Eurostat. 2008
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12. Confidence returning
Corporate bond yields Government bond yields
(percentage points) (percentage points)
First 3‐yr LTRO OMT announced OMT announced
8 8 7 15
6.5 13
7 7 Return of
Return of confidence
6 11
confidence
6 6
5.5 9
5 5
5 7
4 4
4.5 5
Spain Italy
Medium‐grade bonds
Portugal (rhs) Ireland (rhs)
3 3 4 3
Jul‐11 Oct‐11 Jan‐12 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐12 Jun‐12 Aug‐12 Oct‐12 Dec‐12 Feb‐13
Note: EMU all maturities. Monthly data; Latest data: February 2013. Note: 3-month moving average of monthly data. Latest data: February 2013.
Sources: BofA Merril Lynch, Datastream and ECB calculations. Sources: Thomson Reuters and ECB calculations.
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13. Problems for smaller firms
Interest rate on new loans to firms
(Loans up to EUR 1 million to firms, percent per annum)
7 7
6 6
5 5
4 4
3 3
Germany Spain France Italy
2 2
2008 2009 2010 2011 2012 2013
Source: ECB.
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14. Fiscal progress
Government deficits in 2009 and 2012
(% of GDP)
15.6
12 12
2009 2012
10 10
8 8
6 6
4 4
2 2
‐0.2
0 0
Note: Budget balance is corrected for capital injections into banks.
Source: European Commission's winter 2013 economic forecast and ESCB.
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15. 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
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