Mario Draghi Economic situation in the euro area Euro Summit 24 October 2014 Recovery has lost momentum Rubric Real GDP (quarter-on-quarter growth rate) 1.0 0.5 0.3 0.1 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0 2008 2009 2010 2011 Sources: European Commission and Eurostat. Latest data: 2014Q2. 1 2012 2013 2014 Unemployment remains unacceptably high Rubric Unemployment rate Compensation per employee (percent) (year-on-year growth rate) 4 25 Youth unemployment 23.3 20 3 15 2 O verall unemployment 10 11.5 1 1.1 5 0 2004 0 2006 2008 2010 2012 2004 2014 2006 2008 Source: Eurostat. Latest data: August 2014 for the unemployment rate and 2014Q2 for compensation per employee. 2 2010 2012 2014 Inflation Rubric is expected to remain low in the near term HICP: overall and exclusion-based measure (year-on-year percentage change, percentage point contribution) 5 5 4 4 H ICP 3 3 2 2 1 0.8 1 H ICP excluding food and energy 0.3 0 -1 2008 0 -1 2009 2010 2011 2012 Source: Eurostat. Latest data: September 2014. 3 2013 2014 Confidence key to lift investment Rubric Real GDP and investment (index: 2008 = 100) 105 GDP excl. investment 100 GDP 95 90 Private investment 85 80 Public investment 75 2008 2009 Sources: ECB calculations and European Commission. Latest data: 2013 (forecast 2014). 2010 2011 4 2012 2013 2014 Need Rubricfor a coherent and comprehensive strategy Monetary Policy Financial policies Coherent Strategy Fiscal policies Structural reforms 5 Monetary policy supports financing conditions Rubric Total cost of bank lending to non-financial corporations (percentages per annum) 8 8 7 7 6 6 5 5 4 4 euro area 3 3 2 2 country dispersion 1 1 0 0 2007 2008 2009 2010 2011 2012 2013 2014 Source: ECB. Latest data: August 2014. Notes: The country dispersion is calculated as min/max over 18 euro area countries. The indicator is calculated by aggregating short and long-term rates using a 24-month moving average of new business volumes. 6 Financial policies restore the resilience of the banking sector Rubric Median core Tier 1 capital ratios of euro area banks (percentages) 13 12 11 Significant banking groups 10 9 8 7 6 2008 2009 2010 2011 2012 2013 2014 Note: Based on publicly available data on significant banking groups, including large and complex banking groups, which report annual financial statements and on data on a subset of those banks that report on a quarterly basis. Source: SNL Financial. Latest data: 2014Q2. 7 Comprehensive progress towards reducing budgetary imbalances … Rubric Euro area government debt Euro area government deficit (% of GDP) (% of GDP) 100 7 95 6 90 5 85 4 80 3 75 2 70 1 65 60 1999 2001 2003 2005 2007 2009 2011 0 1999 2013 2001 2003 2005 2007 2009 2011 2013 Source: European Commission 2014 spring forecast, ESCB. Note: For data-availability reasons, the ratios shown use the older European System of Accounts (ESA 1995) instead of the newer ESA 2010 methodology. 8 …with Rubricfiscal space differing across countries 160 Member state government debt Member state government deficit (% of GDP) (% of GDP) 174.9 160 Debt > 90% 90% > Debt > 60% 8 8 Deficit > 3% Debt < 60% 3% > Deficit > 2% Deficit < 2% 140 140 7 7 120 120 6 6 100 100 5 5 4 80 Maastricht criterion 80 Maastricht criterion 4 3 3 2 2 1 1 20 0 0 0 -1 -1 60 60 40 40 20 0 Note: The budget balance is corrected for injections into banks. Data calculated using the ESA 2010 methodology. Source: European Commission 2014 spring forecast, ESCB. 9 Need Rubricfor structural reforms to lift euro area growth Real GDP Real GDP per capita (2008Q1 = 100) (2009Q1 = 100) 110 110 United States 108 108 106 106 104 104 102 102 100 100 euro area 98 United States 98 euro area 96 96 94 94 92 92 90 2008 2010 2012 90 2008 2014 Source: Eurostat and Federal reserve. Latest observation: 2014Q2. 10 2010 2012 2014 While Rubricstructural reforms have advanced, gaps remain Product market regulation Doing business (DB) indicator (index, annual) (overall rank) 1.6 2013 45 2008 DB 2014 DB 2013 40 1.4 35 1.2 30 1.0 25 0.8 20 0.6 15 0.4 10 0.2 5 0.0 0 EA US UK EA Source: OECD. Note: lower values indicate less regulation. 11 UK US Strong Rubric improvement in business environment is needed Doing business (DB) indicator (overall rank) 90 DB 2014 DB 2013 80 70 60 50 40 30 20 10 0 GR IT LU ES SK FR EA BE SI PT AT NL EE DE LT Source: World Bank. 12 IE FI UK US Need Rubricfor a coherent and comprehensive strategy Coherent Strategy Monetary Policy Price stability Financial policies Banking Union Capital Markets Union Fiscal policies SGP as stability anchor Public investment Structural reforms Concrete and credible plans at national level Completing the Single Market 13 Return Rubric of confidence Coherent strategy for a sustainable recovery Further steps towards sharing sovereignty in economic governance 14