Factbox: Macroeconomic imbalances in 13 European Union countries

The European Commission on Wednesday published the results of an in-depth review of 13 EUcountries identified last year as showing signs of macroeconomic imbalance in areas such as debt management, banking sector reform and labor markets.

The Commission said that while macroeconomic adjustment was progressing, success varied widely across the EU, with particular concerns in several southern European states.

Following are key remarks on individual countries from the 33-page summary of the report.


- Belgium continues to suffer from a loss of export market share. High levels of public debt remain an imbalance and raise concerns about stability.

- The Belgian economy would benefit from a reform of its wage bargaining system, a smaller tax burden and improved total factor productivity.


- Bulgaria's external position remains highly negative, although recent developments go in the right direction.

- Financial sector stability has been preserved, but profitability is very low. Very weak credit growth is a risk to growth and future output. Private sector clearly deleveraging, corporate debt remains a serious concern.


- High levels of mortgage debt, due to the current fragile financial and macroeconomic environment, have increased exposure of the financial system to adverse developments.


- The level of household debt is a concern, although no sudden deleveraging or instability of the financial sector is in sight.

- Loss in competitiveness one of the key challenges, loss of export market share partly due to ongoing restructuring of electronics and forest industries.


- Country's resilience to external shocks is diminishing, medium-term prospects increasingly hampered by long-standing imbalances.

- High and increasing public debt reduces capacity of public finances to handle potential adverse shocks and could result in negative spillovers to the wider economy.

- Labor market rigidities hinder economy's capacity to adjustment and are slowing developments in productivity.


- Public debt, reduced in the 2010-2012 period via one-off capital transfers, remains very high compared to the country's national output per capita and its regional peers.

- Combination of high level of debt stock and low growth is keeping the country vulnerable and exposed to the risk of sudden adverse changes in market sentiment.


- Capacity to withstand and absorb shocks has been dented by long-standing structural weaknesses. High government debt remains a heavy burden for economy, especially in an environment of slow growth, and is key source of vulnerability.

- Resilience of banking sector has severely weakened since mid-2011, undermining banks' ability to support economy and macroeconomic adjustment.

- Italy confronted with severe challenges, full implementation of adopted reforms needed to bear fruits.


- Long-term sustainability of public finances is at risk. Level of private debt high, but with mitigating factors.


- Competitiveness and export performance of the economy appears benign overall.

- High level of private-sector debt, in particular household indebtedness, warrants attention. Private debt, comprehensive and appropriately timed and sequenced housing market reforms would reduce vulnerabilities of households, financial institutions and the government.


- Comprehensive reform strategy accompanied by a credible implementation path would stabilize the financial sector, unleash growth potential and increase employment.

- Slovenia can consider credible repair of the banking sector, maintenance of financial stability and improved governance structures, including eventual privatization of state-owned banks.


- Negative feedback loops amongst a protracted economic recession, deleveraging and volatile market-financing conditions remain a tangible threat.

- Spain can consider greater flexibility in reallocation of resources to rebalance its economy and reestablish international competitiveness. Economy's capacity to adjust rests with well-functioning labor market.

- Financial system's stability and its capacity to finance the real economy rely on swift completion of the banking sector's recapitalization and restructuring.


- Economy remains one of the most competitive in the EU despite a continued reduction in export market share. Macroeconomic risks related to high indebtedness of private sector continue to be important.

(Reporting by Martin Santa; editing by Luke Baker)