A resilient European economy

EU GDP: annual growth rate and cumulative change, 2008-18

-7

-5

-3

-1

1

3

5

7

9

08 09 10 11 12 13 14 15 16 17 18

Cumulative change since 2008-Q1

Annual GDP growth rate

%

forecast

Economic and financial

crisis

Interim recoveryEuro area recession

Current recovery

Key factors surrounding the outlook

Positive factors

Negative factors

IMPROVING LABOUR MARKET

SUPPORTIVE ECONOMIC POLICIES

STRONGER GLOBAL

ECONOMY

NORMALISING INFLATION

STILL SLOW GROWTH OF INVESTMENT

HIGH LEVELS OF

UNCERTAINTY

Improved global growth prospects

3.9 3.73.3 3.2

3.73.9

-0.5

0.00.51.01.52.02.53.0

3.54.0

4.5

13 14 15 16 17 18

pps.

Advanced economies excluding EU China

Emerging Asia excluding China CIS and Latin America

MENA, SSA and other emerging markets World excluding EU (y-o-y%)

forecast

Economic policies remain supportive

Budgetary developments, euro area

-4

-3

-2

-1

0

1

2

-4

-3

-2

-1

0

1

2

12 13 14 15 16 17 18

General goverment balance (lhs)

Change in the structural balance (rhs)

forecast

% of GDP pps. of pot. GDP

Economic policies remain supportive

Composite credit cost indicators, euro area

0

1

2

3

4

5

6

08 09 10 11 12 13 14 15 16Households Non-financial corporations

Sources: ECB, Bloomberg, own calculations

Last observation: December 2016

%

Economic growth 2017

More jobs to be created - but not yet enough

Employment and unemployment, euro area

-3

-2

-1

0

1

2

3

4

5

6

08 09 10 11 12 13 14 15 16 17 18Cumulative change during periods of increase and decrease

Cumulative change since 2008-Q1

pps.

forecast

‘Great Recession’Interim recovery Euro area

recessionCurrent recovery

More jobs to be created - but not yet enough

0

5

10

15

20

25

30

Base year: 2008 Difference with peak 2016Q3

%

Labour market indicators, euro area

Investment still lacks strong momentum

-20

-15

-10

-5

0

5

10

15

20

08 09 10 11 12 13 14 15 16 17 18

Cumulative change during expansion and contraction phases

Cumulative change since 2008-Q1

%

‘Great Recession’Interim recovery

Euro area recession

Current recovery

forecast

Investment (2008-2018), euro area

Energy prices temporarily driving inflation up

-2

-1

0

1

2

3

09 10 11 12 13 14 15 16 17 18

y-o-y %

Other components (core inflation) (pps.)

Energy and unprocessed food (pps.)

HICP, all items

forecast

Inflation breakdown, euro area

Budgetary outlook 2017

Greece outperformed forecasts and targets 2015 and 2016

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2015 2016 2017 2018

EC AF 2015 EC AF 2016 EC WF 2017

y-o-y % change

Real GDP

Greece outperformed forecasts and targets 2015 and 2016

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2015 2016 2017 2018

EC AF 2015 EC AF 2016 EC WF 2017

% of GDP

Primary balance

Downside risks have increased

(-) US fiscal and trade policy (short-term vs medium-term)

(-) Monetary policy divergences

(-) Global risk re-assessment

(-) Impact of the UK 'Leave' vote

(-) Political uncertainty

(-) Banking sector

(-) Geopolitical tensions

Downside risks have increased

-5

-4

-3

-2

-1

0

1

2

3

4

5

09 10 11 12 13 14 15 16 17 18

%

upper 90% upper 70% upper 40%

lower 40% lower 70% lower 90%

central scenario actual

Fan chart, euro area