Euro Monitor 2013

The Allianz Euro Monitor, based on 15 indicators, measures macroeconomic imbalances in the eurozone. The results for 2013 show that slow but steady progress is being made towards more balanced growth in the eurozone. Prof. Dr. Michael Heise, chief economist of Allianz SE, on the results of this year’s report: “With the acute phase of the crisis now over, it is essential that the required reform momentum is maintained, also in the core countries. Encouragingly, all program countries, with the exception of Cyprus, are showing significant improvements. But there is still a long way to go. As the eurozone economy starts to pick up more strongly next year, the benefits of the reforms will start to become more apparent.”

Program countries on the mend


Once again, no single country achieves a score of 8 or more, which would signal balanced performance across the board. However, only one country, Cyprus, scores less than 4, which signals broad-based uneven development based on our rating scale. Last year, there were four countries – Cyprus, Greece, Ireland and Portugal – with an average score of less than 4.


Nine out of the seventeen eurozone countries were able to improve their scores in 2013 in a year-on-year comparison. Particularly encouraging is the fact that this group also includes the program countries (with the exception of Cyprus). This suggests that the consolidation and reform efforts are largely bearing fruit. Nevertheless, the economic weakness – manifested in a number of economic indicators – that continued to plague many EMU countries in 2013 meant that the success of the reform efforts was not as evident as it could have been. Negative economic conditions are still weighing on indicators such as the state deficit, unit labor costs, domestic demand and labor productivity.


The economic slump cannot, however, serve as a general argument explaining why five countries saw their scores deteriorate further and why two countries stagnated at a relatively low level. Other than Cyprus, the developments in Slovenia and Italy, and even in the Netherlands, give cause for concern. The measure of balanced growth in the Netherland sfell by 0.4 points, mainly due to higher public-sector debt, the deterioration on the labor market and a softening of domestic demand. On the positive side, corporate sector debt momentum slowed. With an overall Euro Monitor score of 5.8 points, the Netherlands slipped two rungs to sixth place. Italy dropped one rung to come in 13th. Although important reforms have been passed in Italy aimed at promoting budgetary stability and boosting growth, full implementation of these reforms remains a challenge. 


Hardly surprisingly, countries with a very poor indicator rating have the greatest potential for improvement.Portugal, for example, improved its overall score from 3.8 in 2012 to 4.6 in 2013, with Greece climbing from 3.6 to 4.4. The two indicators that set off the loudest alarm bells remain unemployment and domestic demand. The debt crisis has left a visible scar on the labor market in a number of EMU countries, with marked differences in labor market conditions between the individual countries (only Germany, Austria, Luxembourg and Malta fare well in this respect). As far as the development of domestic demand is concerned, no single country managed to achieve a rating of 8 or more. Seven out of seventeen countries were assigned the worst possible rating, 1, for both of these indicators. These include the program countries, as well as Spain, Italy and Slovakia.


Thanks to the pension reforms implemented in a large number of member states, the outlook for implicit government debt is looking brighter. The required adjustment to the structural primary balance to reflect demographic ageing, as published by the European Commission, has fallen considerably in the euro area as a whole.


The indicator with the best results is now the current account. Twelve out of seventeen countries either have a surplus or balanced books. Only five countries – France, Finland, Estonia, Greece and Cyprus – still have a small current account deficit corresponding to 1-2 percent of their GDP. In this respect, it is, however, important to remember that the current account indicator has to be viewed within the context of the domestic demand indicator. This means that a country with a balanced current account (or even a surplus) that stems from weak domestic demand cannot be assigned a positive rating in this category.


The improvement in current accounts is closely linked to the stabilization of private debt. The 2013 ratings for the debt ratios of private households and non-financial corporations, as well as the liabilities of financial corporations, have improved in many EMU countries compared with 2012, with virtually no country slipping on this score. But Heise warns: “This welcome deleveraging process is, however, likely to take a good few years and will go hand-in-hand with weak lending demand.”



  • Germany maintained its position at the top of the ranking with an unchanged overall score of 7.7 points. As a result, we consider corrective procedures under the EU’s Macroeconomic Imbalance Procedure unlikely.
  • However,Germany scored 8 or more on only nine of the 16 indicators.
  • Germany’s best results were in the category “Private and Foreign Debt” (score 9.3). Private sector debt levels are not impeding growth in Germany.
  • A soft spot of the German economy is the trend in labor productivity which, over the last five years, has actually fallen marginally.

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