Transcript Meeting with the Hungarian Chamber of Commerce

The impact of the financial crisis on the current
economic situation and outlook
for the EU and the euro area in the global context
Presentation by Michał Narożny
DG Economic and Financial Affairs
Unit A-4: Forecasts and economic situation
Meeting with the Hungarian Chamber of Commerce
Brussels, 9 June 2009
European Commission
Slide 1
Overview
I. The financial crisis
II. The impact on the current economic situation
III. The outlook for the EU and the euro area
IV. Policy design
European Commission
Slide 2
Overview
I. The financial crisis
II. The impact on the current economic situation
III. The outlook for the EU and the euro area
IV. Policy design
European Commission
Slide 3
A snapshot of the root causes of the financial crisis
 Exceptional macroeconomic conditions
 Reliance on efficiency and rationality of
markets
 Regulatory/supervisory weaknesses
 Weak international governance
European Commission
Slide 4
Financial markets improve somewhat, …
Short-term interest rates, euro area and US
(level)
6
1.0
5
0.8
4
0.6
3
0.4
2
0.2
1
0.0
0
-0.2
03
04
910596 01 06 06
Euro area three-month rate
ECB's main policy rate
Source:
07
08
09
US three-month rate
FED's main policy rate
Commission services
European Commission
Slide 5
…but overall situation remains fragile
Stock markets (World-wide share prices, FTSE)
Stock markets (World-wide share prices, FTSE)
Last 12 months
Since 2002
110
31/10/07 =100
110
100
100
90
90
80
80
70
31/10/07 =100
70
60
60
50
50
40
30
40
20
Jan02
30
Jan03
Jan04
Jan05
financials
Jan06
Jan07
Jan08
all
Jan09
20
Mar-08
Jun-08
Sep-08
financials
Dec-08
Mar-09
all
European Commission
Slide 6
… and still with sizable vulnerabilities
Corporate spreads over euro-area bonds
bps.
500
450
BBB
400
350
300
A
250
200
AA
150
100
AAA
50
0
Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr07 07 07
07
08 08 08
08 09 09
European Commission
Slide 7
Credit growth is declining noticeably
Loans to private sector and money supply
Loans to households and non-financial corporations
yoy %
13
12
11
10
9
8
7
6
5
4
3
2
99
00
01
02
03
04
05
06
07
loans to private sector
M3 (centered ma)
08
09
yoy %
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
00
01
02
03
04
05
06
07
08
09
Loans to households
Loans to non-financial corporations
European Commission
Slide 8
Overview
I. The financial crisis
II. The impact on the current economic situation
III. The outlook for the EU and the euro area
IV. Policy design
European Commission
Slide 9
Financial crisis affect the real economy via
 Credit conditions: besides interest-rate effects (partly
reversed, in nominal terms), spreads are higher and non-price
conditions tighter on e.g. size of loans or collateral requirements
 Confidence effects: confidence weakened considerably to
stand at historical lows, well beyond the countries / sectors most
directly affected by the crisis
 Trade: demand for capital and durable consumer goods
collapsed end 2008 causing sharp fall in industrial production /
exports; difficulties in trade financing did not help
European Commission
Slide 10
Global economy in a severe recession
World trade and world expectations
(y-o-y %-change of the 3-month moving average)
15
(level)
60
10
55
5
50
0
45
-5
40
-10
35
-15
30
-20
25
03
04
05
world trade (lhs)
Source:
06
07
08
09
world manufacturing PMI (rhs)
CPB, Reuters
European Commission
Slide 11
Trade collapsing also in Emerging Markets
Trade volume of goods, main regions
25
20
y-o-y% of 3ma
15
10
5
0
-5
-10
US
-15
Asia
-20
EU
source: CPB estim ates
2009m01
2008m01
2007m01
2006m01
2005m01
2004m01
2003m01
2002m01
2001m01
2000m01
1999m01
1998m01
1997m01
1996m01
1995m01
1994m01
1993m01
1992m01
-25
European Commission
Slide 12
Sharp contractions of output in Q1 2009 in key economies
GDP in the US and Japan
2
(q-o-q % change, sa)
1
0
-1
-2
-3
-4
-5
07Q2
07Q3
07Q4
08Q1
08Q2
US
Source:
08Q3
08Q4
09Q1
09Q2
Japan
Commission services, ECB
European Commission
Slide 13
Commodity prices much lower than in recent years
Commodity prices, annual averages
400
USD prices
2000 = 100
forecast
350
300
250
200
150
100
50
00
01
02
03
Food
Fuels
T otal incl. fuels
04
05
06
07
08
09
10
Other basis mat.
T otal excl. fuels
European Commission
Slide 14
Overall, very limited external support
European Commission
Slide 15
EU and EA also in a severe recession
Contributions to real GDP growth, euro area
1.0
(qoq % point contributions; swda)
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2
inventories
net exports
domestic demand (excluding inventories)
GDP growth
Source:
Commission services
European Commission
Slide 16
Be aware of vertical lines - also within the EU
Industrial production
yoy %
10 change
Mar-09
5
0
-5
-10
-15
-20
-25
99
00
01
02
03
04
05
06
07
industrial production
3-month moving average
08
09
BE
-12.0
DE
-21.7
IE
--
EL
-5.8
ES
-24.7
FR
-15.9
IT
-23.8
CY
-6.0
LU
-26.7
MT
--
NL
-10.3
AT
-15.3
PT
-6.9
SI
-18.5
SK
-18.0
FI
-16.7
EA
-19.6
European Commission
Slide 17
Retail sales confirm the bleak picture
Retail sales
5
yoy %
Apr-09
4
BE
0.3
DE
-0.4
3
IE
-7.1
2
EL
--
ES
-7.3
1
FR
--
0
IT
--
-1
CY
--
LU
--
MT
--
NL
--
-4
AT
2.6
-5
PT
-1.9
SI
-8.5
SK
-9.2
FI
0.5
EA
-2.3
-2
-3
-6
99
00
01
02
retail sales
03
04
05
06
07
08
09
3-month moving average
European Commission
Slide 18
Large build-up of excess capacity and unwanted
accumulation of stocks
Equipment investment and capacity utilisation
12
yoy%
level (%)
10
86
84
8
82
6
80
4
2
78
0
76
-2
74
-4
-6
72
-8
70
99
00
01
02
03
04
05
06
07
08
09
equipment investment (lhs)
capacity utilisation in manufacturing (rhs)
European Commission
Slide 19
Survey indicators show a turnaround, but remain low
Economic sentiment indicator (s.a.)
long-term average = 100
120
110
100
90
80
70
60
EU
EA
50
1994 1995 1996 1997
1998 1999
2000 2001
2002 2003
2004 2005
2006 2007
2008
European Commission
Slide 20
Sentiment collapsed across sectors, recovery confirmed?
Confidence indicator for industry and for services (s.a.) until May 2009
Se rvice s confide nce indicator
Industrial confide nce indicator
10
5
B a la nc e s %
B a la nc e s %
40
EU long-term average
EU long-term average
30
0
20
-5
-10
10
-15
0
EU
-20
-25
-30
EA
-10
EU
EA
-20
-35
-30
-40
-40
European Commission
Slide 21
Climate tracer suggests extraordinary contraction
Climate Tracer
2
expansion
downswing
1
Jan-00
level
0
-1
-2
-3
-4
-5
-0.6
May-09
upswing
contraction
-0.3
0
m-o-m change
0.3
European Commission
Slide 22
Overview
I. The financial crisis
II. The impact on the current economic situation
III. The outlook for the EU and the euro area
IV. Policy design
European Commission
Slide 25
Global economy in recession
2007
(percentage change on preceding year)
World GDP growth
GDP growth in:
- the US
2008
2009
2010
Spring
Jan-09
Spring
Jan-09
Spring
Jan-09
5.1
3.1
3.3
-1.4
½
1.9
2¾
2.0
1.1
1.2
-2.9
-1.6
0.9
1.7
- Japan
2.4
-0.7
-0.1
-5.3
-2.4
0.1
-0.2
- China
13.0
9.0
9.7
6.1
6¾
7.8
8
2.9
0.9
1.0
-4.0
-1.8
-0.1
0.5
- EU
European Commission
Slide 27
GDP growth revised down sharply in 2009
(Real GDP growth, %)
EU
2
1
1
0
0
-1
-1
-2
-2
-3
-3
-4
-4
-5
-5
2008
Autumn 08
2009
Interim 09 (Jan.)
Euro area
2
2010
Spring 09
2008
Autumn 08
2009
Interim 09 (Jan.)
2010
Spring 09
European Commission
Slide 28
EU outlook in a nutshell
• EU economy fell into recession, as financial crisis intensified
and world trade contracted sharply
• Financial markets are showing signs of gradual stabilisation,
but remain fragile
• Ambitious EU and government action key to achieving
stabilisation towards end 2009 and moderate growth in 2010
• Leading indicators provide some positive signals
European Commission
Slide 29
The EU forecast – an overview
(Real annual % change
unless otherwise stated)
euro area
EU27
GDP
Consumption
Total investment
2008 2009
0.8
-4.0
0.5
-0.9
0.0 -10.4
2010
-0.1
-0.3
-2.7
2008 2009
0.9
-4.0
0.9
-1.5
0.1 -10.5
2010
-0.1
-0.4
-2.9
Employment
Unemployment rate *
Inflation
0.7
7.5
3.3
-2.6
9.9
0.4
-1.5
11.5
1.2
0.7
7.0
3.7
-2.6
9.4
0.9
-1.4
10.9
1.3
-1.9
69.3
-0.7
-5.3
77.7
-1.2
-6.5
83.8
-1.3
-2.3
61.5
-1.5
-6.0
72.6
-1.9
-7.3
79.4
-2.0
Gov't balance (% GDP)
Gov't debt (% GDP)
Current account bal. (% GDP)
* % of the labour force
European Commission
Slide 30
German recession worse than French in 2009
• German economy is more open: Exports per GDP 49% in
Germany vs. 27% in France (2007), Share of manufacturing
sector 24% in Germany and 13% in France
• Germany is specialised in investment goods production,
and expensive cars in automobile sector
• France has larger public sector, stabilising household
income: Compensation of employees paid by the public
sector + social transfers 56% of gross disposable income
of households in France, compared to 43% in Germany.
European Commission
Slide 31
II. The EU economic situation and outlook:
Exports plunge
EU
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
-12
-12
-14
-14
2008
Autumn 08
2009
Interim 09 (Jan.)
Euro area
6
2010
Spring 09
2008
Autumn 08
2009
Interim 09 (Jan.)
2010
Spring 09
European Commission
Slide 32
Modest recovery starting in 2010 in the EU
(year-on-year real GDP growth, %)
EU and EA growth profile
3
yoy %
2
1
forecast
0
-1
-2
-3
-4
-5
08Q1
08Q3
09Q1
09Q3
10Q1
EU
Euro area
10Q3
European Commission
Slide 33
Investment is set to contract markedly
(Investment volume in construction and equipment, euro area)
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
Euro area
yoy % ch.
forecast
2004
2005
2006
construction
2007
2008
equipment
2009
2010
total
European Commission
Slide 34
Labour market next in line to deteriorate
Actual and structural une mployme nt rate ,
e uro are a
Une mploye d pe rsons and une mployme nt rate ,
e uro are a
4
12
11
3
11
10
2
10
9
1
8
0
12
7
%
millions
forecast
%
9
8
-1
7
6
forecast
-2
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Change in number of unemployed persons (rhs)
Euro-area unemployment rate (lhs)
6
97 98 99 00 01 02 03 04 05 06 07 08 09 10
Actual unemployment rate
European Commission
NAWRU
Slide 35
Public finances hit hard
(% of GDP, general gov't)
Government balance
Interest expenditure
Primary balance
2007
-0.6
2.9
2.3
2008
-1.9
3.0
1.1
Structural balance (1)
Gross debt
-1.8
66.0
-2.8
69.3
euro area
2009
2010
-5.3
-6.5
3.0
3.2
-2.3
-3.3
-3.9
77.7
-4.7
83.8
2007
-0.8
2.7
1.9
2008
-2.3
2.7
0.4
EU27
2009
-6.0
2.8
-3.2
-2.0
58.7
-3.1
61.5
-4.6
72.6
2010
-7.3
3.0
-4.3
-5.5
79.4
(1) = The structural budget balance is the cyclically-adjusted budget balance net of
one-off and other temporary measures, estimated by Commission services
European Commission
Slide 36
Less pronounced deterioration in private consumption
4
yoy % ch.
forecast
3
2
1
0
-1
-2
2004
2005
2006
2007
Euro area
2008
2009
2010
EU
European Commission
Slide 37
Strong disinflation ahead
(Headline and core inflation, year-on-year in the euro area)
He adline and unde rlying inflation, e uro are a
4.5
4.0
forecast
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
05
06
07
08
09
10
-0.5 04
HICP All-items
HICP excluding energy
HICP excluding energy and all food
Core inflation (HICP excl. energy and unprocessed food)
European Commission
Slide 38
Output clearly below potential
(Potential and actual GDP growth in % as well as the output gap, EU)
4
yoy % ch.
3
forecast
2
1
0
-1
-2
-3
-4
2004
2005
2006
actual GDP growth
2007
2008
2009
2010
potential GDP growth
ouput gap
European Commission
Slide 39
Considerable uncertainties
External
Domestic
Downside risks
Upside risks
Negative feedback loop from
deteriorating real economy to financial
sector
Stronger impact on confidence of
recovery packages
Protectionism
Faster adjustment in global inventory
cycle, US housing sector, recovery in
Emerging Markets (incl. China)
Disruptive exchange-rate developments
Commodity prices weakening further
Negative feedback loop from
deteriorating real economy to financial
sector
Stronger impact on confidence of
recovery packages
External/domestic vulnerabilities in More favourable consumer response to
some MS exacerbated by current crisis
lower inflation
European Commission
Slide 40
Overview
I. The financial crisis
II. The impact on the current economic situation
III. The outlook for the EU and the euro area
IV. Policy design
European Commission
Slide 41
Lessons from the Great Depression
(where e.g. international conference in the 1930s yielded no results)
European Commission
Slide 42
Swifter action / stronger degree of policy coordination
provides hope
 Comprehensive polices at national, EU and global level where
e.g. the EU increased its support to IMF’s lending capacity by a
further 75 bn.
 EU-specific policies in different areas to
I. restore proper functioning of financial markets;
II. sustain demand in the short term; and
III. pursue and accelerate structural reforms
European Commission
Slide 43
Massive action to stabilise financial markets
Monetary policy
 Policy rate cuts
 Expanding central bank balance sheets
 Coordination of central banks
Government support / bank rescue plans
 Guarantee schemes
 Capital injections
 Impaired assets
 Nationalisation
Enhanced supervision with e.g. the creation of a new European
Systemic Risk Council
European Commission
Slide 44
Sustain demand in the short term...
European Economic Recovery Plan (EERP) agreed on a stimulus of
1.5% of GDP – with a balance to be struck between short-term urgency
and longer-term requirements
Sizeable automatic stabilisers in Europe
Overall budgetary support of around 5% of EU GDP in 2009-10
Action should be timely, targeted and temporary
European Commission
Slide 45
...while combating unemployment...
Action taken following an EU employment summit 7 May:
 Accelerating 19 bn. from European Social Fund to support people hit
by the crisis; co-financing not necessary for 2009-10
 500 mio. micro-credit facility for those with limited access to funds
 Access for 5 mio. young Europeans to apprenticeship
 Increase training for unemployed at an early stage of spell
 Enhance matching services online throughout Europe
European Commission
Slide 46
... and enhancing potential
The EERP is part of the Lisbon Strategy for Growth and Jobs to the
current crisis with measures targeted at stimulating demand while
• raising skills;
• enhancing investment in innovation,
• promoting high-speed internet,
• renewing existing transport and energy infrastructure.
Spill-over effects from the Single Market should be maximised and
long-term challenges and objectives kept in sight
European Commission
Slide 47
Concluding remarks
 The crisis is global and is hitting the EU and the euro area hard
 It would have been worse without the euro in the euro area
 The euro brings important benefits but is not a solution to all problems
 A modest recovery of growth in the EU is foreseen next year, gradually
back to potential – the question is to what potential ?
 EU countries are addressing short-term challenges (with the longer-term
in mind) and in close co-operation within G20
European Commission
Slide 54
p.m. Broadbased downturn across Member States
Belgium
Germany
Ireland
Greece
Spain
France
Italy
Cyprus
Luxembourg
Malta
Netherlands
Austria
Portugal
Slovenia
Slovakia
Finland
2007
2.8
2.5
6.0
4.0
3.7
2.2
1.6
4.4
5.2
3.6
3.5
3.1
1.9
6.8
10.4
4.2
2008
1.2
1.3
-2.3
2.9
1.2
0.7
-1.0
3.7
-0.9
1.6
2.1
1.8
0.0
3.5
6.4
0.9
2009
-3.5
-5.4
-9.0
-0.9
-3.2
-3.0
-4.4
0.3
-3.0
-0.9
-3.5
-4.0
-3.7
-3.4
-2.6
-4.7
Real GDP growth (%)
2010
-0.2
Bulgaria
0.3
Czech Republic
-2.6
Denmark
0.1
Estonia
-1.0
Latvia
-0.2
Lithuania
0.1
Hungary
0.7
Poland
0.1
Romania
0.2
Sweden
-0.4
United Kingdom
-0.1
-0.8
0.7
0.7
Euro area
0.2
EU27
2007
6.2
6.0
1.6
6.3
10.0
8.9
1.1
6.6
6.2
2.6
3.0
2008
6.0
3.2
-1.1
-3.6
-4.6
3.0
0.5
4.8
7.1
-0.2
0.7
2009
-1.6
-2.7
-3.3
-10.3
-13.1
-11.0
-6.3
-1.4
-4.0
-4.0
-3.8
2010
-0.1
0.3
0.3
-0.8
-3.2
-4.7
-0.3
0.8
0.0
0.8
0.1
2.7
2.9
0.8
0.9
-4.0
-4.0
-0.1
-0.1
European Commission
Slide 55
p.m. Public finances hit hard across countries
Belgium
Germany
Ireland
Greece
Spain
France
Italy
Cyprus
Luxembourg
Malta
Netherlands
Austria
Portugal
Slovenia
Slovakia
Finland
2007
-0.2
-0.2
0.2
-3.6
2.2
-2.7
-1.5
3.4
3.6
-2.2
0.3
-0.5
-2.6
0.5
-1.9
5.2
2008
-1.2
-0.1
-7.1
-5.0
-3.8
-3.4
-2.7
0.9
2.6
-4.7
1.0
-0.4
-2.6
-0.9
-2.2
4.2
Government balance (% of GDP)
2009
2010
-4.5
-6.1
Bulgaria
-3.9
-5.9
Czech Republic
-12.0 -15.6
Denmark
-5.1
-5.7
Estonia
-8.6
-9.8
Latvia
-6.6
-7.0
Lithuania
-4.5
-4.8
Hungary
-1.9
-2.6
Poland
-1.5
-2.8
Romania
-3.6
-3.2
Sweden
-3.4
-6.1
United Kingdom
-4.2
-5.3
-6.5
-6.7
-5.5
-6.5
-4.7
-5.4
Euro area
-0.8
-2.9
EU27
2007
0.1
-0.6
4.5
2.7
-0.4
-1.0
-4.9
-1.9
-2.5
3.8
-2.7
2008
1.5
-1.5
3.6
-3.0
-4.0
-3.2
-3.4
-3.9
-5.4
2.5
-5.5
2009
-0.5
-4.3
-1.5
-3.0
-11.1
-5.4
-3.4
-6.6
-5.1
-2.6
-11.5
2010
-0.3
-4.9
-3.9
-3.9
-13.6
-8.0
-3.9
-7.3
-5.6
-3.9
-13.8
-0.6
-0.8
-1.9
-2.3
-5.3
-6.0
-6.5
-7.3
European Commission
Slide 56
p.m. Inflation very low
Belgium
Germany
Ireland
Greece
Spain
France
Italy
Cyprus
Luxembourg
Malta
Netherlands
Austria
Portugal
Slovenia
Slovakia
Finland
2007
1.8
2.3
2.9
3.0
2.8
1.6
2.0
2.2
2.7
0.7
1.6
2.2
2.4
3.8
1.9
1.6
2008
4.5
2.8
3.1
4.2
4.1
3.2
3.5
4.4
4.1
4.7
2.2
3.2
2.7
5.5
3.9
3.9
2009
0.3
0.3
-1.3
1.8
-0.1
0.2
0.8
1.1
-0.6
1.0
1.4
0.5
-0.3
0.7
2.0
1.3
HICP inflation (%)
2010
1.2
Bulgaria
0.7
Czech Republic
0.4
Denmark
2.3
Estonia
1.4
Latvia
0.9
Lithuania
1.8
Hungary
2.0
Poland
2.0
Romania
1.8
Sweden
0.9
United Kingdom
1.1
1.7
2.0
2.4
Euro area
1.1
EU27
2007
7.6
3.0
1.7
6.7
10.1
5.8
7.9
2.6
4.9
1.7
2.3
2008
12.0
6.3
3.6
10.6
15.3
11.1
6.0
4.2
7.9
3.3
3.6
2009
3.9
1.1
0.9
0.6
4.6
3.6
4.4
2.6
5.8
1.6
1.0
2010
3.6
1.6
1.4
0.5
-0.7
-0.4
4.1
1.9
3.5
0.7
1.3
2.1
2.4
3.3
3.7
0.4
0.9
1.2
1.3
European Commission
Slide 57
Thank you for your attention !
More information:
http://ec.europa.eu/economy_finance/eu_economic_situation/index_en.htm?cs_mid=410
http://ec.europa.eu/economy_finance/publications/publication15048_en.pdf
European Commission
Slide 58
Annex: Economic forecasts
Potential policy implications
No direct link, but forecast forms basis for key policy
processes and decisions, e.g.
• Public finances: Stability and growth pact, excessive deficit
procedures
• Structural reforms: Lisbon process and recommendations
to Member States
• Response to the financial crisis: effectiveness, timing and
volume of different measures (to be) taken
In-depth knowledge of the economy necessary
European Commission
Slide 59
2 types of forecasts
1. Main fully-fledged forecasts
2. Interim forecasts
European Commission
Slide 60
Spring and autumn forecasts (1)
•
•
•
•
Frequency: bi-annual each spring and autumn
Last issue: May 4
Next issue: November 3
Regional coverage:
• 27 Member States,
• euro area and EU aggregates
• Candidate countries
• Selected other non-Member States (USA, Japan, China,
Russia, EFTA countries etc.)
European Commission
Slide 61
Spring and autumn forecasts (2)
• Economic coverage: Storage of about 150 variables per
country including
• Expenditure approach: demand components
Income approach: sectoral financial accounts, e.g.
savings rate, public deficit etc.
• Labour market developments, e.g. employment and
unemployment rates
• Price developments, e.g. inflation
but many more are forecast (if data availability allows)
European Commission
Slide 62
Spring and autumn forecasts (3)
• Time horizon: two forecast years with an additional year
added each autumn
• Methodology:
• Bottom-up, model based to different degree
• Several rounds
• Various consistency checks
European Commission
Slide 63
Spring and autumn forecasts (4)
Workflow: Overall about 2 months
• Technical external assumptions: commodity prices,
exchange rates, interest rates as key determinants
• Overall external environment, e.g. world trade
• 3 main iterations of country desk forecasts plus followup calculations including potential growth, output gaps,
aggregations (EA, EU, world trade etc.)
• Plausibility and consistency checks, including 3 special
trade consistency exercises
• Discussion with Member States (meetings, missions)
• Finalisation process (publication, press release etc.)
European Commission
Slide 64
“Output”
• European Economy publication
• Detailed tables
• Basis for many speakings and briefings, presentations,
i.e. policy discussions
European Commission
Slide 65
Track record
• Two studies: European Economy Economic Paper 291,
October 2007, and external evaluation
• Main findings
• comparable to others (OECD, IMF etc.)
• unbiased
• efficient
European Commission
Slide 66
Interim forecasts
• Main question: are we on track?
• Frequency: bi-annual, in between the fully-fledged forecasts.
Last exceptional issue: January 19
• Next issue: September 14
• Coverage:
• Update of real GDP and inflation only
• Seven largest Member States only (with the EU and the
euro area obtained by aggregation)
• Current year only
• Largely indicator-based bridge models
European Commission
Slide 67