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![Page 1: MIP indicators fit for purpose presentation & discussion ESTP Course Luxembourg 10 December 2014 MIP TF.](https://reader036.fdocuments.us/reader036/viewer/2022062503/5a4d1af37f8b9ab05997fc2f/html5/thumbnails/1.jpg)
MIP indicators fit for purpose
presentation & discussion
ESTP CourseLuxembourg 10 December 2014
MIP TF
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Outline
• AMR Statistical Annex 2015• Data sources• Recent changes in methodology • Impact on SA data• Presentation of indicators
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SA to 2015 AMR
• 4th round of MIP• Eurostat in charge of SA production (1st time)• Complete SA: 54 indicators for a total of
14,840 values• Data presented by SB, year, indicator, country• Introduction presenting the main statistical
developments
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Flashes per countryCY 6 programme MT 3ES 5 IDR - 2 FI 3 IDR - 3EL 5 programme IT 3 IDR - 1IE 4 IDR - 2 UK 3 IDR - 3PT 4 IDR - 4 SE 3 IDR - 3NL 4 IDR - 3 SI 3 IDR - 1HU 4 IDR - 2 DK 3HR 4 IDR - 1 LV 3EE 4 AT 2BG 4 IDR - 3 SK 2DE 3 IDR - 3 LT 2FR 3 IDR - 2 PL 2LU 3 CZ 2BE 3 IDR - 3 RO 1 IDR - 4
IDR - 1 previously identified excessive imbalancesIDR - 2 imbalances in need of decisive policy actionIDR - 3 imbalances potentially overcomeIDR - 4 just out of the programme
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Data sources – Headline indicatorsIndicator Data source Statistical domain
Current account balance Eurostat BoP/NA
Net international investment position Eurostat / ECB BoP/NA
Real effective exchange rate DG ECFIN
Export market shares Eurostat, IMF BoP
Nominal unit labour cost Eurostat NA
House prices Eurostat Price statistics / NA
Private sector credit flow Eurostat NA (FA)
Private sector debt Eurostat NA (FA)
General government sector gross debt Eurostat GFS
Unemployment rate Eurostat LFS
Total financial sector liabilities Eurostat NA (FA)
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Data sources – Auxiliary indicatorsIndicator Data source Statistical domain
Real GDP Eurostat NA Gross Fixed Capital Formation Eurostat NA Gross Domestic Expenditure on R&D Eurostat Business Statistics/ NA Net Lending/Borrowing Eurostat BoP/NA Net External Debt Eurostat / ECB BoP/ NA Inward FDI Flows Eurostat BoP/NA Inward FDI Stocks Eurostat BoP/NA Net Trade Balance of Energy Products Eurostat International Trade/ NA Real Effective Exchange Rates - EA trading partners DG ECFIN Share of OECD exports Eurostat/OECD BoP Terms of Trade Eurostat NA Export Market Shares - in volume IMF Labour Productivity Eurostat NA Nominal unit labour cost Eurostat NA Unit labour cost performance related to EA DG ECFIN Nominal house price index Eurostat Price statistics / NA Residential Construction Eurostat NA Private Debt, non-consolidated Eurostat NA (FA) Financial Sector Leverage (debt to equity) Eurostat NA (FA)
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Recent changes in methodologyESA2010 implementation
•R&D expenditure is now investment•Expenditure on weapon systems is now investment•Value of goods sent abroad for processing no longer impacts gross exports and imports •More detailed analysis of pension schemes•Financial activities will be described in more detail at the level of subsectors and instruments
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Recent changes in methodology
BPM6 implementation
•Goods for processing and services under merchanting will be recorded as manufacturing services•Financial activities will be described in more detail at the level of subsectors and instruments•Research and development is now treated as produced assets
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ESA 2010 and BPM6: impact on SA
• Affected indicators:• 10 out of 11 headline indicators
• 19 out of 28 auxiliary indicators
For a total of 8120 values• Twofold impact:
Numerator and denominator/deflator
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Flashes per indicator2004 2008 2013
Current account balance 15 18 5
Net international investment position 9 15 16
Real Effective Exchange Rate 16 10 0
Share of world exports 6 13 17
Unit Labour Cost 11 14 5
House Price Index 14 4 2
Private sector credit flow 5 14 1
Private sector debt 8 13 15
General government gross debt 9 9 16
Unemployment rate 9 3 14
Total financial sector liabilities 8 4 0
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Current Account Balance
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CAB - Definition
The MIP indicator is the three-year backward moving average of the current account balance expressed in percent of GDP
[[(CA/GDP)t + (CA/GDP)t-1 + (CA/GDP)t-2] / 3]*100
based on Eurostat data from Balance of Payments
Thresholds: -4% and +6%
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CAB - Rationale
• Current Account is the major driver of net lending/borrowing of the economy.
• A high current account deficit indicates that the economy is borrowing (typically importing in excess of its exports) and it might lead to an unsustainable external debt position.
• In turn, a high current account surplus maybe considered worrisome when it reflects weaknesses in domestic demand.
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CAB - Auxiliaries indicators
• Special attention to catching up economies
• Inward FDI flows in % of GDP• Destination of capital flow is relevant: FDI inflows provide a
relatively safe finance of Current Account deficits
• Net lending / borrowing in % GDP• Current Account deficits can be financed by EU Structural
Funds which are included under the Capital Account
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013BE 3.7 2.9 2.3 1.9 0.8 0.0 -0.7 -0.7 -1.1 -1.6BG -4.7 -7.8 -11.9 -18.1 -22.0 -19.1 -11.2 -3.4 -0.7 0.4CZ -5.4 -4.0 -2.7 -2.4 -2.8 -2.9 -2.6 -2.7 -2.4 -1.7DK 3.0 3.6 3.4 2.9 2.4 2.5 3.9 4.9 5.7 6.1DE 2.6 3.5 5.0 5.8 6.2 6.2 5.8 5.9 6.3 6.7EE -12.0 -11.2 -11.9 -12.9 -12.9 -7.1 -1.5 1.4 -0.1 -1.2IE -0.6 -2.1 -4.2 -6.7 -8.1 -8.4 -6.4 -4.2 -1.5 1.1EL -6.3 -6.7 -8.3 -11.2 -13.6 -13.6 -12.1 -10.3 -7.4 -3.9ES -4.0 -5.4 -7.2 -8.8 -9.5 -8.1 -6.3 -4.3 -2.5 -0.7FR 0.8 0.4 0.2 -0.1 -0.4 -0.7 -0.9 -0.9 -1.1 -1.3HR -5.8 -5.2 -5.4 -6.4 -7.6 -7.1 -5.1 -2.4 -0.8 -0.1IT -0.6 -0.8 -1.0 -1.3 -1.9 -2.1 -2.7 -2.8 -2.3 -0.9CY -3.7 -4.4 -6.0 -8.2 -11.5 -12.7 -12.1 -8.0 -6.7 -4.0LV -8.0 -10.1 -14.7 -17.7 -17.9 -8.3 -0.6 2.5 -1.2 -2.8LT -6.5 -7.1 -8.4 -10.7 -12.7 -7.9 -3.7 -0.7 -1.8 -1.2LU 9.5 10.2 11.3 10.7 9.2 8.2 7.1 6.8 6.3 5.5HU -7.6 -7.9 -7.6 -7.1 -7.1 -5.0 -2.5 0.1 1.0 2.2MT -1.3e -4.3e -6.1e -5.5e -3.6e -2.5 -3.9 -1.9 0.9 4.0NL 5.3 6.9 8.1 7.8 6.8 5.4 5.6 7.2 8.7 9.8AT 2.2 2.0 2.4 2.8 3.9 3.7 3.3 2.4 2.0 1.4PL -3.5 -3.4 -3.8 -4.1 -5.5 -5.5 -5.2 -4.7 -4.6 -3.3PT -8.0 -8.5 -9.6 -10.1 -10.8 -10.8 -10.9 -8.9 -6.1 -2.5RO -5.9 -7.6 -9.1 -10.8 -11.8 -9.8 -6.9 -4.6 -4.6 -3.3SI -0.8 -1.7 -2.0 -2.6 -3.8 -3.4 -2.0 -0.2 0.9 2.8SK -7.2 -7.4 -8.1 -7.2 -6.4 -4.7 -4.2 -3.4 -1.8 0.2FI 6.2 4.5 4.2 3.6 3.3 2.7 1.8 0.5 -0.8 -1.7SE 6.1 5.0 6.7 7.9 8.6 7.8 6.8 5.9 5.9 6.1UK -1.9 -1.6 -1.8 -2.1 -2.9 -3.1 -3.0 -2.4 -2.7 -3.2
CAB – Statistical Annex
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Current account balances of surplus/deficit countries as % of GDP
CA %
GDP
BG, CZ, EE, IE, EL, ES, FR, HR, IT, CY, LV, LT, HU, MT
BE, DK, DE, LU, NL, AT, FI, SE
CAB – Evolution of external positions
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CAB - Statistical issues
1. Impact of the new statistical methodology (BPM6) and effect on back data availability
2. Asymmetries between Countries (especially financial flows)
3. Inconsistencies with Current external balances (RoW) in National Account
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CAB - Issues 1Impact of BPM6 methodology (2013)
3.5 pp to 0.5 pp MT, HU, ES, FR
0.5 pp to 0 pp PT, CZ, PL, BE, RO, SE, UK
0 pp to - 0.5 pp EL, HR, IT, SI, DK, LT, FI, LU
-0.5 pp to -3.5 pp DE, EE, AT, LV, IE
Impact on 3 years average of Current Account balance as % of GDP
Note: 3years BPM6 data for Bulgaria, Cyprus, Netherlands and Slovakia are missing.
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CAB - Issues 1CA back data availability (BPM6)
Statistical Annex to the Alert Mechanism Report 2015
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CAB - Issues 2Asymmetries between Countries
(505 & 555)
(330)
(200)
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Relative size of inconsistency
(BoP-RoW)/BoP
EU*
* Based on the Countries available (both BPM6 and ESA2010)
CAB - Issue 3The evolution of inconsistencies
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BoP-RoW (BoP-RoW)/BoP
CAB - Issue 3National inconsistencies (2013)
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CAB - Actions
1. Revision of thresholds to be discussed at LIME. Back data for BPM6 are being progressively collected from Member States
2. New methodological guidance embedded in BPM6 (such as incorporation of SPEs).
3. Efforts in further promoting the usage of the FDI network (for MS to reconcile specific transactions)
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CAB - Actions
3. The results of the official 2014 BoP/RoW survey will be presented at the BoPWG in April 2015.
4. ECB will also carry out a similar exercise for Euro Area statistics.
5. Further monitoring work is planned to verify BMP6 actually delivers statistics more consistent with ESA2010.
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Net International Investment Position
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IIP - Definition
The MIP indicator is the net international investment position expressed in percent of GDP
IIP/GDP
based on Eurostat data from Balance of Payments
Threshold: -35%
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IIP - Rationale
• As it is the stock counterpart to the current account balance it allows for a stock-flow analysis of external positions.
• Typically, highly negative NIIPs result from persistently high current account deficits. However, external imbalances can reflect other type of imbalances (e.g. excessive credit expansion).
• What determines the overall vulnerability of the external position of a country is not only its size but also the types of maturities of both gross assets and liabilities.
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IIP - Auxiliaries indicators
• The objective is to qualify the amount of liabilities according to the impact on a country's vulnerability
• Net external debt in % GDP - annual data• Focus on liabilities that require a repayment (excludes portfolio
FDI, equity and derivatives)
• Inward FDI stocks in % of GDP• These are relatively less risky and stable form of financing and
increase less one country's vulnerability
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013BE 28.4 33.5 29.4 28.9 39.7 54.2 50.9 48.1 47.6 45.8BG -30.1 -44.1 -58.0 -81.1 -98.4 -101.8 -95.4 -85.9 -78.2 -76.2CZ -28.2 -26.9 -32.3 -38.7 -38.2 -44.0 -46.1 -45.3 -46.1 -40.1DK -5.3 3.9 -0.2 -5.8 -5.1 4.4 14.0 28.7 37.8 39.7DE 10.7 21.0 27.9 26.5 25.5 34.0 35.4 33.7 34.7 42.9EE -86.3 -84.7 -73.3 -71.3 -75.4 -80.1 -71.2 -55.6 -52.2 -47.1IE -17.9 -24.5 -5.3 -19.5 -75.6 -92.4 -88.0 -112.2 -112.0 -104.9EL -67.0 -77.3 -85.4 -96.1 -74.1 -86.4 -98.3 -85.2 -109.2 -121.1ES -51.9 -55.6 -65.8 -78.1 -79.3 -93.8 -89.1 -91.4 -90.0 -92.6FR -4.7 1.1 1.1 -1.5 -13.3 -14.1 -8.5 -7.5 -11.3 -15.6HR -47.7 -56.5 -77.0 -92.8 -75.3 -87.4 -95.9 -92.0 -89.9 -88.7IT -16.7 -17.7 -22.8 -24.1 -24.7 -26.1 -24.7 -23.4 -28.6 -30.7CY 14.0 19.9 37.8 11.7 -15.1 -30.4 -35.6 -71.7 -147.3 -156.8LV -47.0 -55.6 -64.2 -69.2 -74.1 -82.4 -81.9 -74.4 -66.8 -65.1LT -34.4 -42.6 -48.9 -55.8 -51.5 -58.4 -55.4 -52.2 -53.0 -46.4LU 116.1 133.5 140.5 105.0 158.8 155.1 153.6 191.5 207.2 216.4HU -83.9 -92.5 -95.5 -88.9 -102.7 -116.1 -109.4 -106.7 -94.1 -84.4MT 37.4e 34.6e 26.5e 19.4e 4.5e 24.0 35.1 39.2 53.7 49.2NL 3.7 -2.6 3.2 -6.0 4.2 16.7 24.5 34.1 45.8 31.3AT -17.3 -21.7 -12.9 -9.8 -10.1 -5.1 -5.2 -1.9 -3.1 -0.2PL -41.6 -42.5 -45.7 -50.1 -56.3 -58.8 -65.2 -62.7 -65.4 -68.0PT -66.8 -69.9 -79.3 -88.8 -95.1 -107.9 -104.3 -101.0 -113.8 -116.2RO -26.4 -29.5 -36.2 -47.1 -52.5 -62.0 -63.8 -65.6 -67.3 -62.4SI -7.7 -10.8 -16.8 -21.3 -35.1 -38.9 -42.4 -40.2 -45.2 -38.2SK -39.9 -48.6 -53.5 -51.5 -57.4 -66.7 -63.1 -65.5 -64.1 -65.1FI -9.3 -14.0 -12.4 -25.9 -2.5 6.4 19.7 18.1 14.7 8.8SE -24.9 -20.6 -2.1 10.4 -1.5 0.6 2.9 -9.2 -9.0 -10.8UK -11.4 -7.9 -13.1 -11.3 5.9 -13.4 -6.0 -4.4 -14.9 -15.6
IIP – Statistical Annex
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IIP - Statistical Issues
1. Impact of the new statistical methodology (BPM6) and effect on back data availability
2. Increased reporting requirements related to EU legal acts
3. little is known about the discrepancies observed between national IIP and NFAs (RoW) data
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35 pp to 8 pp LU, MT, FR, HU
8 pp to 0 pp ES, CZ, PT, PL, SI, EE
0 pp to - 8 pp LV, RO, LT, AT, IT, EL, SE, DE, FI
-8 pp to -75 pp UK, NL, CY
Impact on Net International Investment Position as % of GDP
Note: France is based on 2012 data. BPM6 data for Belgium, Bulgaria, Denmark, Ireland, Croatia, Slovakia are missing
IIP - Issues 1Impact of BPM6 methodology (2013)
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IIP - Issues 1IIP back data availability (BPM6)
Statistical Annex to the Alert Mechanism Report 2015
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IIP - Issue 2Increased reporting requirements
Since June 2014 national compilers are reporting additional detail of the Financial Account and International Investment Position also to Eurostat.
Higher frequency (monthly), More components (IIP) andHigher breakdown (geo)
Have resources been allocated to achieve this shift?
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Relative size of inconsistency
(BoP-RoW)/BoP
EU*
* Based on the Countries available (both BMP6 and ESA2010)
IIP - Issue 3The evolution of inconsistencies
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IIP - Actions
1. Back data for BPM6 are being progressively collected from Member States.
2. Annual exercise of Quality Reports was suspended in 2014. A new template has been designed for the 2015 exercise and it now covers also IIP.
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IIP - Actions
3. The 2014 BoP/RoW survey will include for the first time Financial Accounts but should not include stocks.
4. Further monitoring work is planned to verify BMP6 actually delivers statistics more consistent with ESA2010.
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Real Effective Exchange Rate
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Effective Exchange RateBilateral exchange rates do not move together, so we need some method to summarise the overall strength or weakness of a country’s currency
The nominal effective exchange rate (NEER) is defined as the exchange rate of the domestic currency vis-à-vis other currencies weighted by their share in world trade
• Which currencies?• What weights?• Significance of the base year
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NEER
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Real Effective Exchange RateReal effective exchange rate (REER) also takes account of price level changes between countries
• adjusts the NEER by the ratio of foreign to domestic inflation
• assess change in competitive position of a country relative to its competitors
Example• suppose currency of country A has depreciated over one
year by 10% against currency of country B• suppose inflation rate in A is 7% and in B is 2%• then real depreciation (change in REER) is
10% - (7% - 2%) = 5%• improvement in competitive position is 5%,
not the 10% suggested by the NEER
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REER - definition
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REER definitionHow to compute REER?
where, N stands for number of the competitor countries in the reference groupwi is the overall trade weight assigned to the currency iDi and Dj are the deflators for partner country i and country jei,j is the nominal exchange rate of country i in terms of currency of country j
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REER - rationale
"REER often been found to be a statistically significant predictor of the incidence of economic crisis" •Balassa-Samuelson effect•Price and cost competitiveness•Thresholds +/-5% for EA, +/-11% non EA
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REER for MIPREER computed by EC – DG ECFIN:Real – deflated by HICP, ULC, GDP deflator, export
prices, producer pricesEffective – based on bilateral trade (42, 37, EU, EA)ER – X rates vs. USD
Headline indicator 3y % change in REER vs. 42IC; HICP/CPI p.m. y-o-yAuxiliary indicators 3y % change in REER vs. EA; HICP/CPI 10y % change in ULC performance vs. EA based on REER's double export weights
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REER - Data sourcesREERs – DG ECFIN; Price and Cost Competitiveness database
Components:•HICP/CPIEurostatInternational Financial Statistics (IMF IFS); OECD•Exchange RatesIMF IFS; ECB; ECFIN (before 1999)•Unit Labor Cost indexes Eurostat• Bilateral TradeIMF - Data on Trade (IMF DoT)•GDP; export pricesEurostat
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REER – economic interpretationREER vs.42 Industrial Countries; HICP deflated (2000=100)
60
80
100
120
140
160
180
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Germany France UKUSA Japan TurkeyMexico Russia ChinaHongKong Korea Brazil
Copmetitiveness loss
Copmetitiveness gain
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REER – Economic interpretationREER vs.EA HICP deflated (2008=100)
80
85
90
95
100
105
110
115
120
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Germany Ireland Greece SpainFrance Italy Portugal
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REER – Economic interpretationULC based on REER vs.EA (2008=100)
60
70
80
90
100
110
120
130
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Germany Ireland Greece SpainFrance Italy Portugal
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REER – statistical issues
Bilateralexchangerates
Trade basis
Trade weights
Choice of deflators
Coverage of trading partners
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REER – statistical issues and actionsTotal trade - Current source - IMF; and Eurostat data? community vs. national approach (quasi transit)
…and why not trade in manufacturing?…or trade in services?
- Domestic supply (GDP, GVA…)- Frequency of weights updates - Chain linking method
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REER – statistical issues and actionsCoverage of trading partnersECFIN: EA18; EU28; IC37; IC42; BIS: broad index – 61; ECB: EER-39Exchange ratesAverages of daily data; USD vs. EUR
DeflatorsPrice/cost competitivenessHICP/CPI, GDP deflators, Export prices, ULCT ULCM? PPI?
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REER – conclusion
There is no single “all purpose” REER
•– Difficult trade-offs such as fit vs. quality•– Awareness of statistical engine is crucial
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Export Market Shares
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EMS – rationale
Three competitiveness indicator:REER CPI deflated – price competitiveness
Nominal ULC – cost competitiveness
Export Market Shares – broader view of competitiveness; export performance that cannot be explained by price developments
• geographical specialisation (trade openness)• sectoral specialisation • product quality and composition
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EMS - rationale
• EMS is driven by:• numerator effect• denominator effect
+83% in 1994-2007• multilateral trade liberalisation • unilateral trade liberalisation of some emerging
countries (e.g. China, India and Brazil) • increased trade in services due to development of ICT
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EMS – definition (1)•Headline indicator• 5y % change in share of total world exports• p.m. y-o-y
BoP data from Eurostat and IMFThreshold: -6%
•Auxiliary indicators • 5y % change in share of Advanced Economies exports
Eurostat and OECD data• 1y % change in EMS in volume
IMF data
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EMS – economic interpretationGreece
30
40
50
60
70
80
90
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
bn EURSpain
200
225
250
275
300
325
350
375
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
bn EUR
Portugal
30
40
50
60
70
80
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
bn EUR
Cyprus
5
6
7
8
9
10
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
bn EUR
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EMS – statistical issues
• Impact of ESA2010 implementation over 4pp EE, HR, LU, RO
0pp to 4pp BE, IE, LT, PT, SE, UK, AT
- 1pp to 0pp CZ, DK, IT, HU
-4pp to -1pp DE, FR, LV, FI
BPM6 data for BG, EL, ES, CY, MT, NL, PL, SI, SK are missing
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EMS – economic interpretationExport Market Shares in 2013 (5 years % change)
LTLV
ROET
BGPL
SKMT
LUESIE
PTCZ
DENLFR
BEUK
SIAT
SEDKIT
HUCYELHR
FI
-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30
of world total
of advanced economies
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EMS – economic interpretationEMS goods and services in 2013 (5 years % change)
LVLT
ROBG
ETSK
PLCY
ESPT
CZMT
NL
ELUK
BESI
ITDK
ATIE
HUSE
HRLU
FI
FR
DE
-40 -30 -20 -10 0 10 20 30
Goods
Services
Goods ServicesGoods and
Services
DE 8,4 6,6 8,0ES 1,7 3,2 2,0FR 3,1 5,2 3,5IT 2,8 2,4 2,7NL 3,0 2,5 2,9PL 1,1 0,9 1,1UK 2,6 6,5 3,3EU28 31,2 43,6 33,7
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EMS – economic interpretationShare of exports going to EA
30
35
40
45
50
55
60
65
70
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Belgium Germany Ireland France Italy Portugal
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EMS – statistical issuesExport Market Shares (y-o-y % change)
-10
-5
0
5
10
15
20
CY FI UK CZ MT SE IT IE AT NL DK DE FR EL LV SI EE HR BE SK HU ES BG PL PT LT LU RO
in volume
in current prices
Source: IMF for data in volume; Eurostat for data current prices
%
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EMS – actions
• BPM6 – higher coverage in 2015
• Global Value Chains – mapping international trade• Input-output tables and gross trade• Tradables / non-tradables
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Unit Labour Cost
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ULC - rationale
• monitors developments in cost competitiveness across EU MSs
• measures the average cost of labour per unit of output
• rise in an economy’s NULC corresponds to a rise in labour costs that exceeds the increase in labour productivity
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ULC – definition (1)
compensation of empl/no. of employees real GDP per person employed
based on Eurostat data from National Accounts
MIP indicator - percentage change over 3 years
Thresholds: +9% for euro-area • +12% non-euro-area
ULC =
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ULC – definition (2)
3 auxiliary ULC indicators:Labour productivity – yoy % changeNULC – 10 years % change-Both based on Eurostat National Accounts
ULC based on REER for EA-Source: DG ECFIN
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ULC – economic interpretationULC 2000=100
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ULC – economic interpretationFrance
-2
0
2
4
6
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Germany
-6
-4
-2
0
2
4
6
8
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Spain
-10
-5
0
5
10
15
20
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Greece
-15
-10
-5
0
5
10
15
20
25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
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ULC – economic interpretationPoland
-10
-5
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Hungary
-10
0
10
20
30
40
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Romania
-20
0
20
40
60
80
100
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
Bulgaria
0
10
20
30
40
50
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013labour cost labour productivity ULC
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ULC – economic interpretationWages per hour worked in manufacturing (in Euro)
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ULC - actions• Quality Adjusted Labour Index• Total hours worked as input measure for analysing labour
productivity changes over time is not adequate = assumes each hour worked has the same quality
• Combining social surveys with NA data
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House Price Index
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Eurostat
• Headline indicator: year-on-year growth rate of the deflated HPI Eurostat consumption deflator – to reflect the value of house prices
relative to the whole consumption basket Indicative threshold: +6% Source: Eurostat (Price Statistics/NA)
• Auxiliary indicators: 3 years % change of nominal HPI Residential construction as % of GDP
• The scoreboard indicator is calculated using the formula: [((HPIt / DEFLt ) – (HPIt-1 / DEFLt-1)) / (HPIt-1 / DEFLt-1)]*100.
Short overview:
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Eurostat
• Traditionally, large movements in real assets market were associated with economic crises
• Booms and busts in housing markets affect real economy through a variety of channels => important source of macroeconomic imbalances
• Real asset prices are correlated with:
Large movements in monetary and credit aggregates
Household consumption(wealth effect)
Inter-sectorial substitution effect
Economic rationale:
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Eurostat
Issues
• Past periods are not entirely covered (some series rather short, starting in 2009)
• 13 Member States had at least one missing value as of 10 October 2014
• Data available for some past periods from other sources (NCB, ECB, BIS, OECD)
• For 9 Member States missing annual figures were backcasted by MIP Team (BG, EL, ES, CY, LT, LV, MT, AT, PL)
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Eurostat
House prices grow faster than consumer spending
Source: Eurostat
2013: indicator flashes for 2
countries
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Eurostat
House Prices(deflated)2008,2011 and 2013(index 2000 = 100, u.o.i.)
Source: AMR 2015
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Private Sector Debtconsolidated
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Eurostat
• Headline indicator: Expressed in % GDP (stock of liabilities at the end of the year) Instruments: debt securities and loans (F3+F4) Indicative threshold: +133% Source: Eurostat (NA --> FA)
• Auxiliary indicator: Private debt as % of GDP – non consolidated
• The scoreboard indicator is calculated using the formula: PSDt/GDPt * 100
• Measuring the debt of the non-financial private sectors (non-financial corporations plus households and NPISH)
Short overview
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Eurostat
Short overview
• Consolidated data:
Describe each sector as a single economic entity
Reflect the amount of funds that the sector receives from other sectors
• Financial derivatives: excluded since 2013
Improve data comparability
Capture liabilities contracted as funding sources
• Pension schemes: not included because of the heterogeneity of social protection systems across Member States
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Eurostat
• Excessively high private sector debt implies risks for growth and financial stability and increases the vulnerability to economic shocks
• Private debt developments allow for an assessment of the private sector vulnerability to changes in the business cycle, inflation and the interest rate
Economic rationale
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• Implementation of the new methodological framework in September, ESA 2010
• Derogations were granted to Member States for transmission of data, mainly for earlier years and specific components
• Impact of new methodology
•
Methodological aspects
over 14pp BE, CY, LU
0pp to 14pp EL, LV, NL
-15pp to 0ppCZ, DK, DE, EE, ES, FR, HR, IT, LT, MT, PL, RO, SI, SK, FI, SE, UK
over -15pp BG, IE, HU, AT, PT
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EurostatUnavailable data: CZ, UK Source: Eurostat
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Eurostat
Private sector debt, % of GDP2013
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Private Sector Credit Flow
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Eurostat
• Headline indicator:
Expressed in % GDP
Flow counterpart of private sector debt (net, along the year)
Instruments: debt securities and loans (F3+F4)
Indicative threshold: +14%
Source: Eurostat (NA --> FA)
• The scoreboard indicator is calculated using the formula: PSCFt/GDPt * 100
• Consolidated data available in 2013
• Financial derivatives: excluded since 2013
Short overview:
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Eurostat
• High credit flows – practice indicates it as one of the best indicators to predict crises incidence early on, both in emerging ad in advanced economies
• Large credit fluctuations are often associated with:
Potential banking system vulnerabilities
Boom and bust cycles in asset markets
House price bubbles
Current account imbalances
Economic rationale:
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• Implementation of the new methodological framework in September, ESA 2010
• Derogations were granted to Member States for transmission of data, mainly for earlier years and specific components
• Impact of new methodology
•
Methodological aspects
over 3pp BE, EE, LU
0pp to 3pp CZ, DK, EL, ES, FR, IT, LT, MT, NL, PL, PT, SI, UK
-2pp to 0pp BG, DE, IE, HR, LV, HU, RO, SK, FI, SE
over -2pp CY, AT
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Unavailable data: CZ Source: Eurostat
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General Government Debt
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Eurostat
• Headline indicator:
Expressed in % GDP
Indicative threshold: +60%
Source: Eurostat (GFS)
• The scoreboard indicator is calculated using the formula: GGDt/GDPt * 100
• The outstanding amount of the debt is calculated from the following ESA 2010 categories:
currency and deposits (AF.2) + debt securities (AF.3) + loans (AF.4)
Short overview:
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Eurostat
Short overview:
• Maastricht Treaty definition: consolidated GGGD of the whole general government sector at nominal value, outstanding at the end of the year (EDP and SGP)
• GGD comprises central government, state government, local government, and social security funds
• Data for the general government sector are consolidated between sub-sectors at the national level
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Eurostat
• Overall picture of the indebtedness of a Member State (important linkages between private sector debt and general government debt)
• A high level of general government debt increases the vulnerability of a Member State and weakens its room of manoeuvre to deal with crisis situations
Economic rationale:
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• Implementation of the new methodological framework in September, ESA 2010
• Derogations were granted to Member States for transmission of data, mainly for earlier years and specific components
• Impact of new methodology
•
Methodological aspects
over 4pp BE, IE, HR, AT
1pp to 4pp DK, CZ, FR, PT, FI, UK
0pp to 1pp DE, EE, EL, ES, IT, CY, LV, LU, HU, RO, SI, SK
-1pp to 0pp BG, LT, MT, NL, PL, SE
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Source: Eurostat
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General Government Debt, % of GDP2013
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Total Financial Sector Liabilieties
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Eurostat
• Headline indicator: Expressed as year-on-year growth rate Indicative threshold: +16.5% Source: Eurostat (NA --> FA)
• Auxiliary indicator: Financial sector leverage (debt-to-equity ratio)
• The instruments that are taken into account (ESA2010):• F.2 - Currency and deposits • F.3 - Debt securities • F.4 - Loans • F.5 - Equity and investment fund shares or units • F.6 - Insurance, pensions and standardised guarantee schemes • F.7 - Financial derivatives and employee stock options• F.8 - Other accounts payable
Short overview:
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Eurostat
• Aims at measuring the evolution of the sum of all liabilities of the total financial sector to capture its linkages with the real economy
• A very broad measure of the expansion of the exposure to potential risks in the financial sector
• Good early-warning qualities
• Provides a fairly reliable basis for comparison among Member States
• The indicator is not specific to the business model of a specific subsector
Economic rationale:
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• Implementation of the new methodological framework in September, ESA 2010
• Derogations were granted to Member States for transmission of data, mainly for earlier years and specific components
• Impact of new methodology a large majority of Member States do not show any change for some the changes are very limited, mainly due to reclassification of units
into the financial corporation.
•
Methodological aspects
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EurostatUnavailable data: CZ Source: Eurostat
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Non-financial Corporate, Household and General Government Debt 2013 compared to 2008(shaded)% of GDP
Source: AMR 2015
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Unemployment Rate
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Eurostat
• Headline indicator:
Number of unemployed persons as a percentage of the labour force based on International Labour Office (ILO) definition
3 year backward average
Indicative threshold: +10%
Source: Eurostat (LFS)
• Auxiliary indicators: several auxiliary indicators introduced in 2013
• The scoreboard indicator is calculated using the formula: [(UR)t + (UR)t-1 + (UR) t-2] /3
Short overview:
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Eurostat
• Intended to monitor high and persistent rates of unemployment
• It might indicate a potential misallocation of resources and general lack of adjustment capacity in the economy
Economic rationale:
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Source: Eurostat
2013: indicator flashes for 14
countries
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Unemployment rate2008, 2012 and 2015 (forecast)
Source: AMR 2015
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What about your answers?
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Questionnaire
To what extend the indicator currently used in the context of MIP procedure explains imbalances in your country?
To what extend the indicator (in terms of its source, data transformations and data quality) appropriately measures macroeconomic imbalances?
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Discussion Imbalances in your country• Does the current set of indicators used in the MIP
context measure properly the imbalances in your country?
• What are the imbalances in your country? • Are they similar to the ones observed in other EU
countries?• Do you have in your country a procedure/ a country
specific set of indicators to detect imbalances?• Is there any macroeconomic imbalance not detected by
the SB?
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Discussion Imbalances in the European Union• Should we continue using the same scoreboard in the
next MIP rounds?• In your opinion, is there any new imbalance to arise?
Social, financial, economic… ?global or only(!) European, Euro area specific?
• Current SB, does it serve well as an early detector of potential imbalances? What is not covered and should be added?
• Is it better to have separate SB for EA? Or maybe country specific?
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Discussion
Statistical soundness • What is the quality of underlined data used in the MIP
scoreboard?• Would you use for MIP SB data compiled outside ESS?• Composite indicator, would it be more descriptive?• … or should we rather go for the investigations of micro
data?