Download Diapositiva 1 - Banco de España

THE RECOVERY OF THE SPANISH ECONOMY
Luis M. Linde
Governor of the Banco de España
Lunch colloquium of the Asociación para el Progreso de la
Dirección (APD Zona Levante – Valencia)
25 June 2014
THE SPANISH ECONOMY HAS ENTERED A PHASE
OF RECOVERY
In mid-2013 the Spanish economy exited the double-dip recession which marked the
crisis and activity is now on a path of gradual recovery.
GDP: RECENT COURSE AND PROJECTION
5
%
4
3
2
1
0
-1
-2
-3
-4
-5
2007
2008
2009
2010
2011
2012
QUARTER-ON-QUARTER RATE OF CHANGE
2013
2014
2015
2016
YEAR-ON-YEAR RATE OF CHANGE
2
AND HAS CROSSED THE CRITICAL JOB-CREATION
THRESHOLD
The long period of job destruction gave way to modest job creation at the end of
2013, which has continued in 2014 and will foreseeably become more firmly
entrenched in 2015-2016.
EMPLOYMENT: RECENT COURSE AND PROJECTION
6
%
4
2
0
-2
-4
-6
-8
2007
2008
2009
2010
2011
2012
QUARTER-ON-QUARTER RATE OF CHANGE
2013
2014
2015
2016
YEAR-ON-YEAR RATE OF CHANGE
3
WHAT FACTORS EXPLAIN THE ABOUT-FACE IN THE
SPANISH ECONOMY?
The recovery of the Spanish economy was favoured by a
number of positive stimuli received from abroad.
But it would not have been possible without the progress
made in the process of internal adjustment.
4
EXTERNAL STIMULI: THE PICK-UP IN GLOBAL
ACTIVITY FAVOURED EXPORTS AND IMPROVED
CONFIDENCE
In the second half of the year, growth picked up in the advanced economies and,
more particularly, in the euro area, which exited the recession.
GROWTH OF EURO AREA GDP
GROWTH OF WORLD GDP
10
%
4
%
3
8
2
6
1
4
0
-1
2
-2
0
-3
-2
-4
-5
-4
2007 2008 2009 2010 2011 2012 2013 2013 2014 2015
H1
H2
ADVANCED ECONOMIES
EMERGING ECONOMIES
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
QUARTER-ON-QUARTER
ANNUAL
BMPE PROJECTIONS
5
ACTIONS OF EUROPEAN GOVERNMENTS WHICH
ALSO CONTRIBUTED TO CREATING A MORE
CONFIDENT CLIMATE
European governments adopted important measures nationally and in relation to the
governance and functioning of the euro area.
At national level:
• Progress was made in fiscal consolidation processes (the budget deficit of the euro area
decreased to 3% of GDP in 2013 from a peak of 6.4% in 2009).
• Reforms were undertaken in the economies subject to greatest pressure.
• The financial assistance programmes for Ireland and Portugal ended.
• The programmes for Cyprus and Greece proceeded favourably.
At the level of European institutions:
• The new procedures that arose from the governance reform were firmly established
(European Semester, Macroeconomic Imbalance Procedure)
• The budget deficit targets were revised to attune them more closely to the cyclical
conditions of each economy.
• The design of the SSM was completed and it will be fully operational at the end of this year.
• Significant progress has been made in the design of the SRM.
6
THE STRONGLY EXPANSIONARY MONETARY
POLICY OF THE ECB AIDED THE RECOVERY IN
EUROPE AND THE EASING OF STRAINS
The ECB maintained its strongly expansionary monetary policy stance through the
use of conventional and non-conventional monetary policy measures.
Main measures adopted
IHICP AND ECB POLICY INTEREST RATES
2.75
• Reduction of official rates on three
occasions. Negative rates on the deposit
facility.
• Introduction of forward guidance.
• New longer-term refinancing operations
designed specifically to encourage lending.
• Prolongation of fixed-rate tenders with full
allotment until at least end-2016.
• Transparency: extension of projection
horizon and publication of accounts of
meetings (the latter under consideration).
%
2.50
2.25
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
-0.25
Jan -12
Jul-12
Jan -13
Jul-13
Jan-14
MAIN REFINANCING OPERATIONS
MARGINAL LENDING FACILITY
DEPOSIT FACILITY
YEAR-ON-YEAR RATE OF INFLATION
7
THE EASING OF STRAINS ON FINANCIAL MARKETS
HAS BEEN EVIDENT
After summer, sovereign and bank risk premia moved onto a clear downward path.
SOVEREIGN SPREADS VIS-À-VIS GERMANY (10 YEAR)
1600
BANK RISK PREMIA (FIVE-YEAR CDS)
pb
pb
700
1400
600
1200
500
1000
400
800
300
600
200
400
100
200
0
2010
2011
FRANCE
2012
ITALY
SPAIN
2013
2014
PORTUGAL
IRELAND
0
2010
2011
GERMANY
2012
FRANCE
2013
ITALY
2014
SPAIN
8
PROGRESS IN INTERNAL ADJUSTMENT: FISCAL
CONSOLIDATION
The budget deficit stood at 6.6% of GDP in 2013 (excluding aid for the financial
sector), with a fresh improvement in the primary structural balance.
BUDGET BALANCE OF GENERAL GOVERNMENT (NA) AND CHANGES
4
% of GDP
2
0
-2
-4
-6
-8
-10
-12
2007
2008
2009
2010
Change in primary structural balance of general government
2011
General govt.
balance
2012
2013
General govt. balance excl. aid
to financial institutions
9
PROGRESS IN ADJUSTMENT OF COMPETITIVENESS
(THROUGH INTERNAL DEVALUATION)
The moderation of costs and prices was maintained, allowing Spain to make
headway in recovering the lost competitiveness vis-à-vis its main trading partners
and in restoring a favourable inflation differential.
RELATIVE LABOUR COSTS: Spain vis-à-vis the euro area
120
HICP: OVERALL INDEX
y-o-y
1998=100
5
DIFFERENTIAL
EURO AREA
%
SPAIN
ULC, whole economy
115
Compensation per employee
4
Productivity
3
110
2
105
1
100
0
-1
95
-2
2006
90
2007
2008
2009
2010
2011
2012
2013
2014
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
10
PROGRESS IN EXTERNAL ADJUSTMENT
The end of 2013 saw the first positive external balance of the euro era, due mainly to
the non-energy trade surplus and the positive performance of tourism.
10
% GDP
5
0
-5
-10
-15
2006
2007
2008
2009
2010
2011
2012
2013
ENERGY BALANCE (a)
NON-ENERGY BALANCE (a)
TOURISM BALANCE
BALANCE OF INCOME AND TRANSFERS
NET LENDING (+) OR BORROWING
(-) OF THE NATION
–
OTHER
11
DECISIVE PROGRESS IN RESTRUCTURING AND
RECAPITALISATION OF THE BANKING SYSTEM
The Spanish economy has made a considerable public and private effort to
recapitalise its banking system
RECAPITALISATION OF SPANISH BANKS
120
€ bn
13.6
39.5
100
80
61.4
60
40
20
0
PUBLIC
INJECTIONS
PRIVATE ISSUES
HYBRID INSTURMENT AND
SUBORDINATED DEBT
MANAGEMENT
12
DELEVERAGING ACCOMPANIED BY SHIFTS IN THE
COMPOSITION OF CREDIT
The credit crunch at aggregate level is compatible with shifts in the composition of
credit towards sounder firms
13
THE LEGACY LEFT BY THE CRISIS WILL BE
DIFFICULT TO OVERCOME
 Private-sector debt
 Fall in and scant growth of GDP
 Unemployment
 Imbalance in public finances (deficit and debt)
14
THE PRIVATE-SECTOR DELEVERAGING PROCESS
HAS CONTINUED
Spanish firms and households have continued to reduce their debt levels, although
they remain high
DEBT RATIO OF NON-FINANCIAL PRIVATE SECTOR
240
% GDP
210
180
150
120
90
2000
2001
2002
2003
2004
2005
SPAIN
2006
EURO
AREA
2007
2008
UNITED KINGDOM
2009
2010
2011
2012
2013
UNITED STATES
15
THE LEGACY OF THE CRISIS WILL CONDITION THE
STRENGTH OF THE RECOVERY, ITS GROWTH
POTENTIAL AND….
The loss of economic activity with respect to the pre-crisis period is still very high
and several years will be needed to return to the GDP level of 2008
GDP AT CONSTANT PRICES: BEHAVIOUR SO FAR AND OUTLOOK
104
2008 Q2 = 100
100
96
92
88
84
80
76
72
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
16
…THE ABILITY TO ABSORB UNEMPLOYMENT,
FOCUSING ON YOUNG PEOPLE AND UNSKILLED
LABOUR
The unemployment level will fall slowly and an increase in its structural component
must be avoided
UNEMPLOYMENT RATE: RECENT COURSE AND OUTLOOK
30
% of labour force
25
20
15
10
5
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
17
THE SUSTAINABILITY OF PUBLIC FINANCES IS AN
ESSENTIAL INGREDIENT FOR THE DELEVERAGING OF
THE ECONOMY
The public debt ratio continued to increase in 2013 to 93.9%
of GDP. According to the SGP, strict compliance with fiscal targets will allow this trend
to be reversed from 2015.
GENERAL GOVERNMENT DEBT (EDP) IN SPAIN
% GDP
120
100
80
60
40
20
0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
18
THANK YOU FOR YOUR ATTENTION