Eurostat

Use of statistics for economic governance and surveillance in the

European Union

Macroeconomic Imbalance Procedure

John VerrinderEurostat

Eurostat

Outline

• Policy context

• Macroeconomic surveillance and the Macroeconomic Imbalances Procedure

• MIP indicators: the role of Eurostat in improving quality

• Indicators in the Statistical Annex 2015

• Future work

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Eurostat

Policy context:The economic, financial and sovereign debt crisis

EU policy initiatives:

Six-Pack Regulation: enhanced economic policy coordination and surveillance, including MIP

MIP: surveillance mechanism

- part of "European Semester"

- preventive and corrective arm

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Eurostat

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Eurostat

Macroeconomic Imbalances Procedure (MIP)• Scoreboard of relevant macro-economic and macro-

financial indicators• Currently 11 headline indicators• Neither policy targets nor policy instruments• Supplemented by economic judgment and country specific

expertise• Thresholds defined by the European Commission• Composition may evolve over time• Annual exercise - results published in the Alert Mechanism

Report (AMR)5

Eurostat

Macroeconomic Imbalances Procedure

Alert Mechanism Report (AMR)

• One of the starting documents for the MIP

• Initial screening device

• identifies countries for in-depth reviews

• MIP scoreboard + economic reading

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Eurostat

Macroeconomic Imbalances ProcedureIn-depth reviews (IDRs)

• The Commission determines if imbalances exist • No imbalance

• Imbalances, which require monitoring and policy action

• Imbalances, which require monitoring and decisive policy action

• Imbalances, which require specific monitoring and decisive policy actions

• Excessive imbalances, which require specific monitoring and decisive policy action

• Excessive imbalances, which require decisive policy action and the activation of the Excessive Imbalance Procedure

• Programme countries not covered but under tight surveillance7

Eurostat

MIP Headline Indicators Scoreboard

External Imbalances• Balance of Payments

• Current account • Net international investment

• Competitiveness• Real effective exchange rate (REER)• Share of world exports• Nominal unit labour cost

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Internal Imbalances• House price index• Private sector credit flow • Private sector debt • General government debt• Unemployment rate

+• Total financial sector

liabilities (since second exercise)

Eurostat

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MIP Scoreboard 2013

3 yearaverage

p.m.:levelyear

% change(3 years)

p.m.: % y-o-ychange

% change(5 years)

p.m.: % y-o-ychange

% change(3 years)

p.m.: % y-o-ychange

3 yearaverage

p.m.:levelyear

Thresholds -4/6% - -35% ±5% & ±11% - -6% - 9% & 12% - 6% 14% 133% 60% 10% - 16.5%

BE -1.6 0.1 45.8 -0.3 1.5 -9.1 3.6 8.6 2.0 0.0 1.1 163.0 104.5 7.7 8.4 -2.4

BG 0.4 2.6 -76.2 -1.0 0.1 5.7 6.3 14.8p 7.2p -0.1 6.7 108.8 18.3 12.2 13.0 3.3

CZ -1.7 -1.4 -40.1 -3.1 -2.3 -7.7 -0.8 3.7 0.5 -1.2 3.1p 73.7p 45.7 6.9 7.0 9.8p

DK 6.1 7.1 39.7 -2.6 1.0 -17.9 2.3 3.4 1.4 2.8 -1.4 222.6 45.0 7.4 7.0 -0.1

DE 6.7 6.8 42.9 -1.9 2.2 -10.7 2.4 6.4 2.4 1.8p 1.2p 103.5p 76.9 5.6 5.3 -6.3p

EE -1.2 -1.4 -47.1 3.1 2.9 14.0 3.4 9.6 6.8 7.3 5.4 119.4 10.1 10.3 8.6 8.9

IE 1.1 4.4 -104.9 -3.9 1.6 -4.9 1.7 1.3 4.2 0.3 -5.7 266.3 123.3 14.2 13.1 1.0

EL -3.9 0.6 -121.1 -4.4 -0.6 -27.3 2.9 -10.3p -7.0p -9.3e -1.1p 135.6p 174.9 23.3 27.5 -16.3

ES -0.7 1.4 -92.6 -0.4 1.9 -7.1 4.4 -4.6p -0.6p -9.9 -10.7p 188.0p 92.1 24.1 26.1 -10.2

FR -1.3 -1.4 -15.6 -2.3 1.6 -13.0 2.4 3.9 1.1 -2.6 1.8e 137.3e 92.2 9.8 10.3 -0.6

HR -0.1 0.8 -88.7 -4.0 1.2 -20.9 3.5 0.9 1.4 -18.1p -0.2 121.4 75.7 15.8 17.3 3.4

IT -0.9 1.0 -30.7 0.0 1.9 -18.4 1.3 4.1 1.3 -6.9p -3.0 118.8 127.9 10.4 12.2 -0.7

CY -4.0 -3.1 -156.8 -0.8 1.1 -27.2 -3.9 -5.9p -5.9p -5.5 -11.2p 344.8p 102.2 11.9 15.9 -19.5

LV -2.8 -2.3 -65.1 -1.7 -0.9 8.4 3.1 10.5 7.3 6.6 0.8 90.9 38.2 14.4 11.9 5.2

LT -1.2 1.6 -46.4 -0.6 0.9 22.1 8.9 6.0 3.0 0.2 -0.2 56.4 39.0 13.5 11.8 -1.8

LU 5.5 4.9 216.4 0.7 1.5 2.2 9.9 10.5 3.6 4.9 27.7 356.2 23.6 5.3 5.9 8.8

HU 2.2 4.1 -84.4 -4.0 -1.4 -19.2 4.1 5.9 0.8 -5.0 -1.0 95.5 77.3 10.7 10.2 -0.3

MT 4.0 3.2 49.2 -1.3 1.4 -4.0 -0.2 9.5 0.9 -2.1 0.4p 137.1 69.8 6.4 6.4 0.7

NL 9.8 9.9 31.3 0.4 2.7 -9.2 2.1 6.3p 1.6p -7.8 2.1p 229.7p 68.6 5.5 6.7 -3.2

AT 1.4 1.0 -0.2 0.7 2.1 -17.0 1.8 6.4 2.6 2.5e 0.2 125.5 81.2 4.5 4.9 -3.6

PL -3.3 -1.3 -68.0 -4.3 0.2 -0.4 6.6 3.9p 0.9p -4.4e 2.9 74.9 55.7 10.0 10.3 7.6

PT -2.5 0.7 -116.2 -0.6 0.3 -5.3 7.7 -3.0e 1.9e -2.5 -2.4e 202.8e 128.0 15.0 16.4 -5.3

RO -3.3 -0.8 -62.4 0.3 3.9 16.4 16.3 0.7p 4.2p -4.6p -1.5p 66.4p 37.9 7.0 7.1 3.1

SI 2.8 5.6 -38.2 -0.7 1.3 -16.6 3.3 1.3 1.4 -5.8 -4.0 101.9 70.4 9.1 10.1 -10.5

SK 0.2 2.1 -65.1 2.1 0.9 -2.2 3.9 2.5 0.3 -0.5 5.4 74.8 54.6 14.0i 14.2 -0.3

FI -1.7 -1.4 8.8 0.1 2.9 -32.2 -2.8 9.5 1.7 -1.3 0.7 146.6 56.0 7.9 8.2 -11.8

SE 6.1 6.6 -10.8 5.1 1.7 -15.0 0.1 8.1 1.1 4.7 3.7 201.1 38.6 7.9 8.0 9.1

UK -3.2 -4.2 -15.6 3.4 -1.5 -11.7 -1.7 3.8 1.5 1.6 3.4p 164.5p 87.2 7.9 7.6 -7.4p

Private Sector Debt as % of GDP, consolidated

General Government Sector Debt as % of GDP

Unemployment Rate

% y-o-y Change in

Total Financial Sector

Liabilities

Flags: e: estimated. p: provisional.

Note: The figures highlighted are the one falling outside the threshold established by EC the AMR. For REER and ULC, the first threshold concerns EA and the second one non-EA. (1) The figures in italic are according toESA95/BP M5 standards. (2) Current AccountBalance of IE has beenreviseddownwards followingmethodological changes in the treatment of FDI investment income. (3) Current Account Balance of MT has beenrevisedupward following the incorporation of SP Es. (4) International investment positionof CY has beenreviseddownwards following the incorporation of ship-owningSP Es. (5) International investment position of LU has been revisedupwards followingmethodological changes in the treatment of intragroup loans of SP Es and information from a new collection survey in thefinancial sector. (6) International investment positionof MT has beenrevisedupwards following the incorporation of SP Es. (7) Total worldexport is basedon BP M5. (8) Due to derogations for employment series according to ESA 2010, ULC data of HR are based onESA95. (9) Only for House P rice: e= NSI estimates for P L; AT and EL: source National Central Bank. (10) Unemployment rate of FR has been revised downwards. The revision is mainly due to methodological changes to the LFS. Source: European Commission, Eurostat and DG ECFIN (for the indicators on the REER)

Year 2013

External Imbalances and Competitiveness Internal Imbalances

Current Account Balance as % of

GDP

Net International Investment

Position as % of GDP

Real Effective Exchange Rate

(42 IC - HICP deflator)

Export Market Shares

Nominal ULC % y-o-y change in Deflated

House Prices

Private Sector Credit Flow as % of

GDP, consolidated

Eurostat

Data sources• Main providers: National Statistical Institutes and

Eurostat

• Some BoP, NIIP and FA statistics co-produced with National Central Banks

• REER indicators compiled by the European Commission Economic and Financial Affairs DG

• Figure for total world exports by the International Monetary Fund

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Eurostat

The role of Eurostat

• Ensure statistical support for the MIP

• Produce and supply the relevant statistical data

• Ensure high quality of data - CoP

• Set up and implement a quality and monitoring framework for MIP relevant statistics

• Provide methodological support in the process of choice and definition of indicators

• Foster harmonisation and documentation of production processes

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Eurostat

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Eurostat

• Comparability, Reliability, Consistency

• Inventories and quality monitoring

• Data coverage: last 10 years (longer when considering data transformations)

• Backward data calculation- ESA 2010- BPM6

Statistical challenges

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Eurostat

The Statistical Annex 2015

• 11 headline indicators +

• 28 auxiliary indicators (8 social indicators)

- Activity rate

- Long-term unemployment rate

- Youth unemployment rate

- % of young people not in employment, education or training

- people at risk of poverty or social exclusion

- At risk of poverty rate

- Severely materially deprived people

- People living in households with very low work intensity

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Eurostat

Future work• Continue efforts to guarantee data quality

• Annually quality assessment report (Eurostat/ECB)

• Statistical support in the review of the scoreboard composition

• Enhance MIP scoreboard accessibility

• Built a network of national MIP correspondents

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