28.11.2014

The European Commission has released the Annual Growth Survey 2015 and the Alert Mechanism Report which starts the annual surveillance under the Macroeconomic Imbalances Procedure in accordance with Regulation (EU) 1176/2011 of the European Parliament and of the Council of 16 November 2011.

In its survey, the Commission recommends three main pillars of pursuing an economic and social policy. In 2015 efforts are to be aimed at mobilising additional investment, enhancing the EU investment climate, renewed commitment of the member states to structural reforms to support job creation and the pursuit of fiscal policies aimed at long-term control over deficit and debt. 

The Alert Mechanism Report identifies the member states for which the European Commission considers that in-depth reviews are needed in order to find out the existence or overcoming of macroeconomic imbalances and the related risks. The identification of the states is based on a scoreboard of 11 macroeconomic indicators and on the conclusions from the in-depth reviews by state from the previous cycle of surveillance. 

This year 16 states have been identified for an in-depth review. They include states with excessive macroeconomic imbalances (Italy, Croatia and Slovenia), states with imbalances in need of decisive policy action (Ireland, Spain, France and Hungary), states experiencing imbalances (Belgium, Bulgaria, Germany, the Netherlands, Finland, Sweden and the UK), as well as two new states (Portugal and Romania) which are included after the completion of economic adjustment programmes. For Greece and Cyprus the surveillance of their imbalances and monitoring of corrective measures take place in the context of their programmes. 

The Commission reports some progress in correcting the external and internal imbalances in the EU but it is insufficient and heavily impeded by the macroeconomic environment characterised by slow growth, insufficient credit activity, long period of low inflation and high levels of unemployment in some states. Despite the differences by state, the progress for the EU as a whole is unsatisfactory concerning the the adjustments to the current account of states with surpluses, the external indebtedness risks, the high levels of private sector indebtedness, as well as the historically high levels of unemployment, poverty and social exclusion.          

In its assessment the Commission points out that Bulgaria experiences macroeconomic imbalances that need to be monitored and policy actions relating to the long adjustment to the labour market, with greater progress seen in the adjustment to the net international investment stance. In 2013 Bulgaria reports a current account surplus and an improvement in the export shares despite the growing labour market costs. Private sector indebtedness is slightly above the indicative threshold and is concentrated in the corporate sector. Despite the fact that in the first half of 2014 the unemployment drops for the first time since the beginning of the crisis, the levels of youth unemployment, poverty and social exclusion remain a main challenge for the country. Recent developments in the banking sector are identified as a factor that may have considerable influence on the economic growth.

When interpreting the Report data, it should be taken into account that a transition to the new balance of payment methodology (BP6) and ESA2010 took place in September. Data are not available for all indicators for the entire period and therefore the values of the indicators as calculated under the old methodology (BP5/ESA95) are used. The indicative thresholds have not been changed due to missing full lines of indicators for all states.